Article Archives >> To the Point

May the president of a small 501(c)(3) corporation appoint her husband to be the organization's pro bono attorney to give legal advice and handle routine legal matters?

Generally, yes. The president/CEO of a nonprofit corporation normally has authority to hire professional consultants for the organization unless the Bylaws or the Board provide otherwise. The Board can overrule her selection if it so desires, and since there is no compensation involved, there would be no economic penalty for doing so even if there were a formal contract.

Normally when a charity has an economic transaction with a close relative of an officer or director, the charity and the other party are concerned about excess benefit tax issues. But since there is no pay involved here, it cannot be an excess benefit transaction.

The real question is whether it is a good choice. Is he competent in the areas of your concern? Is he willing and able to get help when necessary?

It is hard to fire volunteers. It is extra hard when they are members of the president’s family. It may be a great idea, but the scope of the representation ought to be spelled out clearly in advance so you are sure you are getting the best advice.

Comments from our Readers
I must disagree with Don. I can see no way that the President's attorney/husband can render impartial advice in matters where there is a difference on the Board. If the President wants to take a certain action and her husband agrees or supports her, will other Board members really
believe that he is rendering impartial advice? I may not be illegal, but at least it is a conflict of interest and at worst it could be unethical.
--Bill Shields, General Counsel, American College of Radiology.

This an excellent point. It applies equally to an attorney serving both as a member of the Board and as counsel, which is why many attorneys do not want to serve as counsel to an organization while also serving as a director (See Ready Reference Page: “The Lawyer on the Board: Playing a Dual Role.”)

Whether an attorney whose wife is on the board can render impartial advice may depend on their personal relationship, which is probably better not to scrutinize.

I interpreted the question, however, as asking the lawyer to handle “routine” legal matters, not dealing with significant differences on the Board. Maybe that distinction should be part of the understanding as to when the counsel will be utilized. --Don Kramer

Article Archives >> To the Point

Pillars of Accountability: A Risk Management Guide for Nonprofit Boards, 2nd Edition $12.00 Visit our Amazon bookstore for more books on nonprofit law.