• Key point 6-08. State and federal laws provide limited immunity to uncompensated officers and directors of churches and other charities. This means that they cannot be personally liable for their ordinary negligence. However, such laws contain some exceptions. For example, officers and directors may be personally liable for their gross negligence or their willful or wanton misconduct.
Church Officers, Directors, and Trustees
* A federal court in Arizona ruled that the Volunteers Protection Act prevented individual board members of a charity from being personally liable for unpaid wages claimed by a former officer. A charity that provided services to area youth experienced a shortfall of public funding resulting in a significant indebtedness. The charity received a notice from the IRS concerning a year and a half of unpaid payroll taxes. The total debt to the IRS, including penalties and interest, amounted to $70,000. As a result of the debt the IRS placed a lien on the charity's asset, making it even more difficult for the charity to obtain grants and further funding. Within a few months the charity ran out of money from its earlier grants.