Joining the board of a fair or festival—most of which are governed by boards—can be a fun and rewarding experience. However, it is no small undertaking, and if the organization finds itself in hot water, you could be held personally responsible. That’s because nonprofit organizations, like many of those that put on local fairs and festivals, are still susceptible to some of the same threats as for-profit businesses, including the potential for lawsuits. If the organization is sued and doesn’t have the proper protections in place, as a board member, the plaintiff could come after you personally, which could cost you your home, savings and other assets.
For this reason, it’s important you examine the board for any red flags before joining. Asking a few questions beforehand can help you protect your personal assets, while also helping to ensure that the nonprofit has strong board governance procedures and proper coverage in place to protect its mission.
1. Know what is expected of you as a board member
Make sure you ask how much time you will need to commit to the board, how many meetings there will be, if you will have any specific responsibilities such as fundraising requirements, etc. If the board seems unorganized and cannot give you clear answers, that could be a sign of trouble ahead.
2. Review the nitty gritty details
Ask the board if you can review all reporting and corporate governance documents, bylaws,
budgets, employee salaries and policies, resource allocations, vendor contracts and any other financial documents. Find out what percentage of funds are used for administrative costs versus funding the fair or festival. Check to see if board meeting notes and other records are kept up to date, as these could help in a future dispute. If the board is unable to produce any of these documents, this could be a red flag that they’re not doing everything they can to protect the organization.
3. Ensure the board has taken steps to mitigate risk
Inspect the bylaws to see if they provide indemnification to the board members to the fullest extent of the law and for the advancement of defense expenses. Most boards have directors and officers liability insurance to ensure board members are protected if the organization is sued. Since fairs and festivals are at the mercy of the weather, the organization should also have comprehensive weather insurance to protect it from being financially devastated should the event be canceled or disrupted due to weather. Not having protections in place for worst-case scenarios is a red flag that the organization is prone to risk and could influence your decision to join.
4. Look for a history of legal troubles
Ask if the organization has any past or pending lawsuits or regulatory investigations. In addition, do your own research to see if the organization has negative ratings or reviews. Recent auditing issues or internal disagreements could be red flags that joining the board might put you at risk of being sued and held financially accountable for the organization’s actions.
5. Examine other board members
Get to know the other board members. Not only will this help you get a feel for the internal structure of the board and their leadership style to see if you’re compatible, but it can also shed light on any shady activity or tensions within the organization. You may find the organization hasn’t been upfront with you about what is expected of you, or you simply may not get along with the board.
Serving on the board of a fair or festival can be a rewarding experience, but it is important that you do your due diligence to ensure you can make an informed decision about all the potential risks before doing so.
