Understanding Nonprofit Liability in Oklahoma

Running a nonprofit organization is a chance to make a difference in the community. But with this opportunity comes responsibility—and risk. Many nonprofit leaders focus on their mission but overlook one critical aspect of their operations: liability.

This blog dives into the intricacies of nonprofit liability laws in Oklahoma and provides actionable insights on how to protect your organization.

Why Nonprofit Liability Matters

Many nonprofit leaders assume their organizations are immune to lawsuits due to their charitable nature. However, this is a common misconception. Like any business, nonprofits can face legal challenges—whether from an injured volunteer, a data breach, or a breach of contract.

If your organization isn’t adequately protected, a single lawsuit can drain financial resources, damage your reputation, or even shut down your operations. Understanding Oklahoma laws and how they apply to nonprofits is the first step to minimizing these risks.

Whether you’re running a small local nonprofit or a large organization serving thousands of people, liability protections should be a part of your operational strategy.

What Is Liability?

Liability refers to the legal responsibility for one’s actions or omissions. For nonprofits, liability can arise in many ways, including the following scenarios:

• An event attendee gets injured on-premises.
• A donor discovers mishandled funds.
• Intellectual property disputes over the use of images, music, or text.
• Volunteer misconduct.
• Employment disputes with staff or contractors.

Navigating these risks is especially tricky in Oklahoma, as liability laws vary depending on the type of nonprofit, the activities involved, and the circumstances.

Liability Protections Under Oklahoma Law

Nonprofits in Oklahoma enjoy some protections under the law, but these protections are not absolute. Here’s a breakdown of key legal protections and their limitations.

1. Oklahoma Charitable Immunity Laws

Oklahoma’s charitable immunity statutes, such as those outlined in the Governmental Tort Claims Act, can offer limited protection to nonprofits. These laws aim to shield charitable organizations from certain lawsuits, particularly when the organization acts in good faith.

However, immunity protections often don’t extend to injuries caused by negligence, misconduct, or violations of federal laws (such as discrimination or harassment laws).

2. Liability for Board Members and Volunteers

Board members and volunteers of Oklahoma nonprofits are often shielded from personal liability for actions they take in good faith on behalf of the organization. Oklahoma law assumes these individuals are acting in the best interest of the nonprofit as long as they are not engaging in criminal or grossly negligent behavior.

Key point: This protection often exists only if the organization has up-to-date governing documents, such as bylaws, and complies with its fiduciary duties (e.g., ensuring funding is responsibly allocated).

3. Employment and Discrimination Laws

Nonprofits may assume that because of their charitable status, they aren’t subject to employment laws—but that’s not the case. Oklahoma nonprofits must comply with federal employment protections under the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act.

Failure to follow these laws can leave your organization vulnerable to lawsuits from employees or independent contractors.

4. Contracts and Vendor Liability

Sign contracts carefully. Nonprofits often collaborate with vendors for services such as catering, printing, or operations. If there’s a breach of contract, your organization could be held liable. Ensure contracts include clear terms and conditions to avoid any misunderstandings.

5. Insurance Requirements for Nonprofits

Insurance is a nonprofit’s first line of defense against financial losses caused by lawsuits. Though insurance is not legally mandated for nonprofits in Oklahoma, it is highly advisable. Common types of insurance coverage include the following:

• General Liability Insurance: Covers injuries or property damage.
• Directors and Officers (D&O) Insurance: Protects board members and key leaders from personal financial losses due to lawsuits.
• Professional Liability Insurance: Ensures coverage for claims related to errors or oversights in service delivery.

6. Incorporation and Tax-Exempt Status

Ensuring your nonprofit is properly incorporated under Oklahoma law and obtains its 501(c)(3) status with the IRS is crucial. Incorporation can shield board members and staff from personal liability because the nonprofit becomes a separate legal entity.

Additionally, 501(c)(3) status offers financial benefits like tax exemptions and protections, which can reduce exposure to regulatory fines or financial risks.

Reducing Nonprofit Risks

Now that we’ve covered where liabilities exist under Oklahoma law, let’s focus on proactive steps to protect your nonprofit.

1. Keep Governing Documents Up-to-Date

Ensure your nonprofit’s bylaws and policies are current and compliant with both federal and Oklahoma laws. Regularly review these documents, especially following significant organizational changes, to confirm accuracy. Consult with an attorney if needed to strengthen language about liability protection for board members and volunteers.

2. Implement Training for Staff and Volunteers

Everyone involved in your nonprofit—whether paid staff, unpaid interns, or volunteers—should receive training on compliance, workplace conduct, and safety standards. This reduces the likelihood of accidents or legal infractions.

3. Create Clear Contracts

Draft professional contracts for every vendor or collaborator. Include terms that safeguard your organization if a service isn’t delivered as expected or if a dispute arises.

4. Develop a Crisis Plan

Sometimes, legal issues are unavoidable regardless of preparation. Establish a clear crisis communication plan to respond to lawsuits, injuries, or PR crises that arise. Assign clear responsibilities and prepare statements to maintain trust with donors and the public.

5. Work with a Legal Expert

Consult with an attorney familiar with Oklahoma’s nonprofit laws to identify potential liabilities and establish proper safeguards. A small investment in legal support now could save your organization thousands of dollars in the future.

Joining a Strong Network

Oklahoma nonprofits thrive when they share resources, knowledge, and best practices. Joining local support networks like the Oklahoma Center for Nonprofits can provide access to discounted services (like insurance) and legal assistance to better manage liability risks.

Your Next Step Toward Protection

Operating a nonprofit is incredibly rewarding, but it comes with risks that must be addressed head-on. By understanding liability laws in Oklahoma and taking proactive measures, your nonprofit will be equipped to handle challenges while focusing on your mission.

Want to learn more about nonprofit liability and risk management? Connect with a legal advisor to review your current practices and ensure your organization is protected. Don’t wait until it’s too late—legal peace of mind starts today.