[Foundation-l] The fallacy of power

[Delirium]

Anthony wrote:
> On Thu, May 1, 2008 at 7:32 PM, Delirium <delirium at hackish.org> wrote:
>   
>> Mike Godwin wrote:
>>
>>     
>>> Samuel writes:
>>>       
>>  >
>>  >> Trusting someone to give good topical advice and trusting them to
>>  >> make good
>>  >> long-term decisions and remain true to their principles are rather
>>  >> different.
>>  >>
>>  >
>>  > Well, sure, but that's why the law imposes fiduciary responsibilities
>>  > on the Board of Trustees (even the appointed ones). The checks and
>>  > balances you are concerned about are built into the law itself.
>>  >
>>
>>  Not very effective ones, though. Firstly, an uncompensated officer of a
>>  nonprofit organization acting in good faith is extremely difficult to
>>  sue, due to explicitly granted immunities in various federal and state
>>  laws.
>>     
>
> I believe the corporation has to elect to grant these immunities.
> However, the WMF has.  WMF Bylaws Article VIII: "The Foundation shall
> indemnify any Trustee or officer or any former Trustee or officer to
> the full extent permitted by law."
>   
Well, it's currently somewhat unsettled, but a number of experts think 
that the federal Volunteer Protection Act of 1997, though intended 
primarily to indemnify volunteers against suits by outsiders (e.g. the 
board of a medical charity being sued if someone dies under the 
charity's care), is worded broadly enough that it also has the effect of 
indemnifying volunteers against breach-of-fidiciary-duty suits by the 
organization itself, with the exception of reckless or malicious 
breaches. It also explicitly preempts most state laws that would provide 
less immunity.

In any case, my second point (not quoted above), that in very few cases 
are we going to sue anyone anyway, is more important imo---the threat of 
a fiduciary-duty-breach lawsuit is not a very effective tool for keeping 
the organization on track. That's why we have so many 
discussions/arguments about tools that actually are effective, such as 
methods for selecting board members.

-Mark