The Other Side: A Refresher on Non-Profit Law

After almost 20 years of providing the non-profit perspective on legal and other issues to my for-profit lawyer colleagues, I was recently given reason to wonder if this column has had any effect. As I've mentioned here occasionally, I am a member of a group of general counsel of non-profit organizations in the D.C. area that meets for lunch every three months to share concerns, swap stories and generally learn from each other. Out of respect for the confidentiality of our sessions, I won't mention any companies by name, but I daresay you would recognize every single one of them.

They include museums, universities, media companies, environmental groups and, obviously, C-SPAN.

At our most recent lunch, one general counsel lamented how a large clothing company had used her organization's name and logo prominently in a national catalog and promised to donate a portion of sales to the charity. The problem was nobody ever contacted her to get permission. The clothing company was surprised to be challenged. Its attitude was basically, "You should be honored to be mentioned in our catalog." When told that the name and logo were registered marks, and that the catalog appeal triggered not inconsequential state solicitation registration obligations on the charity, it apparently cut no ice with the catalog lawyer.

At this point another group member chimed in, "I swear a lot of these corporate counsel don't think charities even have lawyers." Heads nodded in agreement around the lunch table. A third general counsel told of getting a call from a corporate counsel who seemed to be giving him a tutorial on how the world works. Our colleague at the other end of the table noted that the assets of the charity in question probably exceeded the market value of the corporate counsel's company by a factor of 10. I'd summarize our collective view as, "Are these company lawyers living under a rock?" How can they not know the charitable sector has billions or trillions of dollars in assets and revenues, and controls large segments of the economy--education and health care, to name just two--all of which demand the attention of legal professionals?

I don't want to paint with too broad a brush, but I've had my own experiences with such cluelessness from for-profit lawyers. Years ago I got a call from a lawyer representing one of C-SPAN's board members. He seemed frustrated that his boss had been on the board for a few years, but he hadn't gotten the usual SEC-like reports from us. "How much of C-SPAN do we own?" he asked me. I thought he was going to faint when I told him nothing. He couldn't fathom the idea that his boss, who sat on many boards and owned large stakes in their companies, was serving as a trustee of a charity and would get no financial benefit from that service. I was relieved to have been able to explain the situation to him, because after all, he represented one of our board members. But I couldn't help wondering if he'd ever heard of a non-profit organization.

I don't expect this state of affairs to ever change. It is human nature to ignore information that does not track with our own experience. I know this because I've been explaining to people for more than 30 years, I hope patiently, that C-SPAN is not a government agency and it receives no tax money and never has. Still, one expects those learned in the law to be a bit more on the ball than the average Joe. At the very least, every lawyer practicing today had to take a course called Corporations. True, the emphasis of that course is on stocks and derivative actions, but it includes non-profit corporations. But I realize it is also true that lawyers don't learn the law in school. They learn it by practicing it. So my colleagues and I at the non-profit bar will continue to explain non-profit law to them.

Contributing Author

Bruce D. Collins

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