In this Issue:
- Maine Supreme Court Weakens Charitable Immunity
- Maine Tax Overhaul Delayed Pending Referendum
- Upcoming Event: Federal and Maine Nonprofit Law — 2009 Year in Review
Welcome to the latest issue of the Maine Nonprofit Law E-Bulletin. I send E-Bulletins 3 or 4 times per year to provide updates and analyses on legal and policy matters respecting Maine nonprofit organizations. I do my best to keep the messages brief, timely, and useful to nonprofit staff, board members, volunteers, advisors, and donors. At the same time, no one may rely on these E-Bulletins as legal advice, and I encourage you to consult a qualified attorney for advice on any particular situation.
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Maine Supreme Court Weakens Charitable Immunity
In a decision handed down this past July, the Maine Supreme Court significantly narrowed the scope of the charitable immunity doctrine in Maine. The effect of this decision will be to expand the tort liability exposure of Maine charitable organizations. For organizations that carry commercial general liability insurance, the added liability exposure likely will be minimal. But organizations without such insurance would face considerably heightened level of risk.
Charitable immunity has existed in Maine for almost 100 years, first as a common law doctrine and eventually recognized implicitly by statute in 1965, at 14 MRS § 158. In a nutshell, the doctrine is important because it has meant that Maine charitable organizations could raise it as a defense to dismiss a lawsuit in its very early stages. The rationale behind the doctrine is that funds donated to charities should not be diverted to non-charitable purposes such as satisfying tort claims. Although several other states enacted versions of charitable immunity in the past, Maine is one of the few states to have a relatively robust doctrine still intact.
In Picher v. Roman Catholic Bishop of Portland, 2009 ME 67, the Maine Supreme Court held that the charitable immunity doctrine does not apply to intentional torts. In the wake of the Picher case, charitable immunity is somewhat less robust, as it only applies to non-intentional tort actions, e.g., negligence. The tort claims in Picher were based on alleged sexual abuses condoned by the church, and were decidedly intentional in nature. Other intentional torts include: assault, battery, conversion (theft), false imprisonment, trespass to land, and intentional infliction of emotional distress.
Perhaps the most common kinds of intentional torts in the nonprofit world are those of slander (verbal defamation) and libel (written defamation). Any nonprofit organization that maintains a website, publishes a newsletter, or has meetings (i.e., all nonprofit organizations) has some fundamental exposure to such defamation claims. The typical commercial general liability insurance policy does cover defamation claims, so organizations that have such insurance will remain protected within the limits of their policies. However, for organizations that have chosen to rely on charitable immunity instead of purchasing insurance, that cost-benefit calculation is now much less favorable.
Maine Tax Overhaul Delayed Pending Referendum
In the August E-Bulletin, I wrote at length about the charitable deduction ramifications of the tax overhaul bill that was passed last spring by the Maine Legislature, Public Law 2009 Ch. 382, LD 1495. The law was to have taken effect starting January 1, 2010. However, opponents (mostly Republicans) gathered enough signatures to place a referendum on the June 2010 statewide ballot. Thus, the law will not take effect unless the bill is approved by Maine voters, in which case it would take effect 30 days after the Governor proclaims the certification of the tabulation of the June election.
Upcoming Event: Federal and Maine Nonprofit Law — 2009 Year in Review
Presenter: Rob Levin
Date: Thursday, January 28, 9:00 am – Noon
Location: Iris Network, Portland
Sponsor: Maine Association of Nonprofits
This past year was another busy one in the nonprofit legal world, with significant changes occurring at the federal and state level. Start 2010 off on the right foot by catching up on these changes. Presented by an attorney, but designed for non-attorneys, this workshop will be valuable to the novice as well as the skilled nonprofit veteran.
This workshop will include:
- Review of charitable immunity doctrine in wake of Picher case
- Possible changes to Maine income tax and sales tax laws that affect nonprofits
- Changes in Maine investment standards for nonprofits (UPMIFA)
- Review of IRS Form 990 Changes
To register, visit www.nonprofitmaine.org or call 207-871-1885.
CIRCULAR 230 DISCLOSURE: Any federal tax advice contained in this communication or attachment is not to be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending any transaction or matter addressed in this communication.