I loaned a nonprofit corporation a substantial amount of money over a five-year period while I was serving as a volunteer. I left the organization in 2013, and they still owe me most of the loan. We have hard copies documenting the loan along with email trails. I have repeatedly asked the Founder/CEO to pay me something on a monthly basis but she refuses to do so, stating the organization doesn't have the funds. My understanding is that I have no legal recourse since it's a nonprofit, and the Founder can pretty much do whatever she wants. Do I have the right to see the organization's financial statements from 2010-2013? What can I do?
I don’t know where you got your understanding that you have no recourse against a nonprofit, but as a general proposition it is not true. Nonprofit corporations can sue and be sued, just like for-profit corporations or individuals. Having documentation of the loan significantly improves your chances of winning a lawsuit.
You have undoubtedly heard about the difficulty of getting blood out of a stone. But when the founder says she can’t pay (particularly if she is carrying on some sort of program), it probably means only that it would be difficult to pay and she doesn’t want to. If you are not a voting member of the organization or on the board, as a general creditor you don’t have rights to financial information other than copies of filed Forms 990 or 990-EZ. But you would have a right to see the organization’s financial statements if you file suit and start discovery. And a lawsuit usually gets people’s attention.
I don’t usually recommend litigation, but if you are still owed a substantial amount of money and can’t work out a payment arrangement with the founder (or the members of the board), I suggest that you contact a lawyer. If you get a judgment against the organization, you can then work out a payment plan — if you want to.
Tuesday, June 10, 2014
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