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How do you handle an affiliation with a disreputable group?

Your Legal Questions Answered

How do you handle an affiliation with a disreputable group?

If my 501(c)(3) charitable organization has had a close working relationship with another nonprofit for a number of years, but now finds out that they have a history of theft and embezzlement, is it best for my group to cut all ties with the other group? Can the "affiliation" have bad legal repercussions on my group if we don't?

Since the charitable sector relies so heavily on trust and transparency to obtain the contributions necessary for organizations to fulfill and expand their missions, you want to be very sure that you don’t taint your reputation by association with theirs.  If their theft and embezzlement is historical, past tense, and over and done with, and if you can be sure that they have totally cleaned up their act, you may decide the benefits of working together outweigh the downside risks.  If the improprieties are continuing, however, I would disassociate as quickly as possible.  If you don’t control their organization and none of your people are involved in doing or covering up misdeeds, you probably don’t have much legal risk.  Your risks are probably more reputational, but they can often be much more significant than the legal risks.

Thursday, July 19, 2012

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