Legal basics for small charities

This guide is for people running small charities without a lawyer on call, which is most of us. You don't need to become a legal expert. You do need to know which everyday situations carry legal risk, and when to get help. After reading, you'll understand the basics of contracts, how to protect your charity's name and logo, who owns the photos, designs and writing people make for you, when to call a lawyer, and where to find free or low-cost legal help.

Contracts: put it in writing

A contract is an agreement that the law will enforce. It doesn't need to be long or full of legal words. A clear email or letter that both sides agree to can be a contract. But a spoken promise is hard to prove later.

Your charity makes contracts all the time:

• renting space or equipment
• hiring a contractor, like a bookkeeper or web designer
• accepting a grant
• agreeing a sponsorship
• partnering with another organization
• signing up for software or services

Before you sign anything

• Read all of it, including the small print about cancellation, automatic renewal and penalties.
• Check who's signing. Only people your board has authorized should sign for the charity. Your bylaws or a board resolution should say who. Sign with your title, like "Jane Smith, Treasurer, on behalf of Example Food Pantry Inc.", so it's clear the charity is the party, not you personally.
• Watch for personal guarantees. Some leases and loans ask a person to guarantee the debt personally. That puts your own money at risk.
• Look for indemnity clauses. Indemnity means one side agrees to cover the other side's losses. If you agree to indemnify someone, your charity may have to pay for problems you didn't cause. Ask what your insurance covers.
• Know how to get out. How much notice do you need to give? What does ending early cost?
• Keep a copy in a shared folder where the board can find it.

Your name and logo: trademarks

A trademark is a word, phrase, symbol or design that identifies who provides goods or services. Your charity's name and logo can be trademarks.

The U.S. Patent and Trademark Office (USPTO) explains:

• You don't have to register a trademark. By using your name and logo, you may get what are called "common law" rights in the area where you use them. Those rights may be limited to that geographic area.
• State registration gives rights in that state only.
• Federal registration with the USPTO gives rights across the United States, lets you use the ® symbol, and lets you bring a lawsuit about the trademark in federal court. The USPTO isn't an enforcement agency, so you'd still be responsible for dealing with anyone who copies you.

Only use the ® symbol after your trademark is federally registered.

Before you choose a name or logo

Search to check nobody else is already using something similar for similar work. Try:

• the USPTO's trademark search,
• your state's business and charity registries,
• a plain web search and social media.

Choosing a name already used by another charity in your field can lead to confusion, a demand letter, and the cost of rebranding.

Letting others use your name

Partners, sponsors and volunteers will want to use your name and logo. Give simple written guidelines: how it may be used, where, and that they must ask first for anything new. Our guide on corporate partnerships covers sponsor agreements.

Who owns the work: copyright

Copyright protects original creative work: writing, photos, videos, music, artwork, logos, websites, even software.

The U.S. Copyright Office explains that a work is protected by copyright the moment it's created and fixed in a tangible form, such as written down or saved. Registration is generally voluntary, but you must register before you can sue for infringement of a U.S. work.

The volunteer trap

Here's where charities get caught out. Copyright usually belongs to the person who created the work, not to the organization that asked for it.

There's an exception called "work made for hire." The Copyright Office explains that work made for hire includes work prepared by an employee within the scope of their job. Certain kinds of commissioned work can also count, but only if they fall within specific categories and there's a written agreement signed by both sides saying so.

So if a volunteer designs your logo, or a freelance photographer takes your photos, they probably own the copyright unless you have a written agreement. That can cause real problems if they later object to how you use it.

The fix is simple: before someone creates something important for you, such as a logo, website, photos or a video, get a short written agreement. It can transfer ownership to the charity (often called an assignment) or give the charity a broad license (permission) to use it. A lawyer can help you draft a template once, and you can reuse it.

Using other people's work

Just because an image or song is online doesn't mean you can use it. Use your own photos, images you have a license for, or work that's clearly offered for free use. Check the license terms.

When to get a lawyer

You don't need a lawyer for everything. You should talk to one when:

• you're signing a lease, loan or any contract with a large sum or a long term,
• someone threatens to sue you, or sends a demand letter,
• you're hiring your first employee,
• you're dealing with a serious complaint about a staff member or volunteer,
• someone may have been hurt at your activity,
• you're merging with, or taking over, another organization,
• a government agency contacts you about a problem,
• you're unsure whether an activity fits your tax-exempt status, such as lobbying, see our guide on political activity and lobbying, or
• you're buying property.

Getting advice early is almost always cheaper than fixing a problem later.

Free and low-cost legal help

Many small charities get legal help for free or at reduced cost. Here are places to look:

• Pro bono programs. Pro bono means lawyers working for free for the public good. In many cities and states, there are programs that match community organizations and charities with volunteer lawyers for things like contracts, employment questions and real estate. Ask your state or local bar association, or your community foundation, what exists near you.
• Bar association lawyer referral services. Many state and local bar associations run lawyer referral services that can connect you with a lawyer, sometimes with a reduced-fee first meeting. The American Bar Association keeps a directory of referral services.
• Law school clinics. Some law schools run clinics where students, supervised by professors, help nonprofits and small organizations.
• Your board and network. A lawyer on your board can help spot issues, but be careful: they may not practice in the right area, and if they or their firm are paid for legal work, that's a conflict of interest to handle under your policy.
• The Golden Hint Exchange. Member charities may share templates or experience. That isn't legal advice, but it can help you ask better questions.

When you call, be ready to explain your charity briefly, what you need, and your deadline.

Legal basics checklist

• Our board has decided who can sign contracts
• We keep a list of all contracts and their renewal dates
• We searched before choosing our name and logo
• We have written agreements for logos, photos and websites made for us
• We get written consent before using people's photos or stories
• We know where to find free or low-cost legal help

If you want to hear how other charities handled a similar question, ask a member charity for help through the Exchange.