What is the Personal Liability of Members of an Unincorporated Nonprofit Association in California?
Full Question:
Answer:
If you wish to significantly alter the liability of individual members, an incorporated entity should be considered. Unincorporated status does not have corporate status and offer the protection against indidual liability that corporate status offers. In a nonprofit association, each member is generally personally liable for the obligations and misdeeds of the association. The law regarding unincorporated associations is unclear.
The following are reasons why a member, director, officer, or agent of a nonprofit association in California may be held individually liable, aside from common law theories of liability:
(1) The member, director, officer, or agent expressly assumes
liability for injury, damage, or harm caused by particular conduct
and that conduct causes the injury, damage, or harm.
(2) The member, director, officer, or agent engages in tortious
conduct that causes the injury, damage, or harm.
(3) The member, director, officer, or agent is otherwise liable
under any other statute.
Tax-exempt, nonprofit status does have drawbacks, such as:
•Profits of the organization cannot be divided among workers or directors (although workers and directors may be paid reasonable salaries)
•Only a small amount of the group's income can be earned from sources unrelated to the organization's reason for receiving tax-exempt status
•The assets of the group cannot go toward purposes other than those that warranted the tax-exempt status
Please see the following CA statutes regarding unincorporated non-profit associations:
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=18001-19000&file=18605-18640
