Some “Big C” Issues for Not-for-Profits

There are a number of current legal risks facing not-for-profits that those who govern and manage not-for-profits and their advisers should be aware of. Celebrity risks Celebrity endorsement of a not-for-profit may help build its profile and enhance its credibility, but celebrities also pose some potential legal risks that need to be considered and managed.  First, the fact that the celebrity’s other commitments may be unpredictable must be factored into the arrangements, and the issue of who is to meet any costs associated with the celebrity’s involvement (fees and expenses), precisely what a celebrity is expected to do, and the term of appointment must be considered, and the commitments clearly spelt out (essentially in contractual form).    Finally, there may be risks associated with the particular celebrity that could arise and those contingencies considered – if the celebrity fails to perform, if the celebrity becomes a reputational liability (for instance, imagine having Rolf Harris as a patron), or if the not-for-profit is “captured” by the celebrity’s agenda. Change risks Change is always with us, and there are some important changes coming in the next few years.  The new Accounting Standards framework alters the format of financial statements for accounting periods from 1 April 2015 (Financial Reporting act 2013 and External Reporting Board), and the current Accounting Infrastructure Reform Bill will alter audit or financial review requirements (an audit will be required if annual expenditure exceeds over $1M, an audit or review will be required if expenses are $500K – $1M, and there will be no audit or review obligation if expenses are less than $500K). A new Incorporated Societies Act...