Who can legally represent your organization? In simple terms, anyone acting on behalf of your organization is the agent, while the nonprofit itself is the principal. For example, let's say employee "Mike" (the agent) buys pizza for a meeting on behalf of the nonprofit (the principal). This transaction legally binds the nonprofit. But what if Mike accidentally hits a pedestrian due to speeding on the way back? In that case, the victim's family lawyer could sue both Mike and the nonprofit. The lesson here? Be cautious about who you empower as your agent. For example, you wouldn’t want to hire someone with a track record of having speeding tickets.
Three Kinds of Agents
- Express: Clearly designated agents with explicit authority.
- Implied: Agents with implied authority based on their role.
- Apparent: Agents who appear to have authority but may not actually have it.
Now that Mike is no longer an employee, efforts should be made to remove the appearance of agency. This includes taking back business cards or changing passwords, etc. If it appears that Mike is still working for the nonprofit organization in any way, and another lawsuit was to happen, the nonprofit could find themselves in another bind through agency association perception.
Who Represents You?
Be mindful of who represents your organization, whether it's your employees, board, advisors, or volunteers. These people are the face of your organization, embodying its values and mission. It's essential to choose representatives who live with integrity, and hold true to the organization’s mission and values.
Managing Volunteers
Managing volunteers can be tricky because they're there to make a difference, requiring a unique approach. Set clear expectations by defining roles and responsibilities, share your mission to help volunteers understand the importance of their work, and ensure volunteers are trained and aware of company policies through training.
Managing a dedicated team of volunteers boils down to appreciation. Warm, verbal appreciation is often more meaningful than financial rewards. Solicit feedback from volunteers. Requesting their insight is a sign of appreciation that will keep them engaged and contributing to the mission for years to come.
Afterall, the greatest gift leaders may receive is feedback!
Finally, when it comes to fundraising, volunteers should donate before soliciting donations. Not to keep picking on Mike, but imagine if Mike is going door-to-door soliciting donations. If someone asks him if he donated and he says “No,” it can be pretty embarrassing for the nonprofit and for Mike.
Is a Volunteer an Agent?
Yes, in a legal sense. Agents don't have to be paid to have a legal relationship. If someone agrees to volunteer, they become your agent automatically. Principal-agent relationships don’t always have to be written. A verbal agreement is enough to establish agency. To minimize risk, nonprofits should adequately train their volunteers, and insurance never hurts either.
Questions?
Contact the Mighty Penguin team today! We're here to help you navigate the complexities of your nonprofit organization through strategic planning, grant writing, fundraising and more!
