Immunities from Liability for Colorado Nonprofit Organizations
| Jurisdiction | Colorado,United States |
| Citation | Vol. 25 No. 5 Pg. 37 |
| Pages | 37 |
| Publication year | 1996 |
1996, May, Pg. 37. Immunities from Liability for Colorado Nonprofit Organizations
Colorado nonprofit organizations are involved in a wide range of activities, many of which expose the organization, its volunteers and employees to potential liability for their acts or omissions. The Colorado legislature and Colorado courts, recognizing the importance of nonprofit organizations to our society and economy, have extended a number of liability immunities to nonprofit organizations and their directors, officers, volunteers and employees. Attorneys advising or serving on the boards of such organizations should be familiar with these immunities in order to analyze the liability risk of the various activities of the organization.
This article outlines the two general categories of these limitations on liability. First, the various Colorado statutory exemptions from liability are summarized. Second, the history and current status of the broader common law liability limitation extended to nonprofit organizations by Colorado case law---known as the charitable trust fund immunity doctrine---is discussed.
Statutory protections from liability may be categorized into two classes: those that apply to a broad category of nonprofit organization volunteers, employees and other good Samaritans and are found in Article 21 of Title 13, CRS, and those that are directed specifically to nonprofit corporations and are found in the Colorado Nonprofit Corporation Act.(fn1)
The operation of these statutory immunities can have an impact on the organization and structure of a nonprofit organization. For example, the Colorado Nonprofit Corporation Act does not prohibit nonprofit corporations from compensating officers for performing their duties. If officers receive compensation, however, they will lose one of the statutory immunities discussed below, which applies only to directors and officers who serve without compensation. Therefore, the limits of the various statutory immunities must be understood before making decisions involving issues such as compensation.
In addition, it should be noted that, while the statutes summarized below may prevent an organization or individual from ultimately incurring liability for an act or omission, they do not always prevent plaintiffs from filing lawsuits. Thus, litigation costs may still be incurred in defending such actions, and for this reason, indemnification of directors, officers and other persons involved with nonprofit organizations for these costs, possibly backed by insurance, continues to be an important issue for such persons.
A number of specific immunity statutes are found in Article 21 of Title 13, CRS. The purpose of these statutes is best described in the opening section to the so-called "good Samaritan" statute (summarized below): "It is the intent of the general assembly to encourage the provision of services or assistance by persons on a voluntary basis to enhance the public safety rather than to allow judicial decisions to establish precedents which discourage such services or assistance to the detriment of public safety."(fn2) Other statutes have similar stated intentions.(fn3)
Despite this common goal, however, the statutes differ in their application: some apply to all volunteer nonprofit organization workers; some apply only to persons engaged in certain activities; some apply only to those organizations recognized as exempt from income taxation under certain subsections of Internal Revenue Code ("Code") § 501(c); some apply only to directors, whether or not compensated; and some apply only to volunteer officers, directors and trustees. In addition, some statutes exclude certain individuals, such as physicians and other health care workers.
Thus, the specific requirements of each statute must be examined to determine whether the act or omission in question is protected by one or more of the statutes. Given the potential conflict between, and overlap of, these statutes, this is an area that could benefit from clarification by the legislature.
Good Samaritan Statute. One of the most well-known exemptions from liability is the good Samaritan statute,(fn4) adopted as part of the tort reform legislation passed in 1986. This statute is quite broad and potentially applies to all persons performing a "good Samaritan" act, whether or not on behalf of a nonprofit organization. In addition to individuals, this statute protects a nonprofit organization itself, when it is acting as a good Samaritan.(fn5)
The statute protects such persons by negating the general tort law concept of assumption of a legal duty of care and granting immunity from liability for civil
Volunteer Service Act. In 1992, the...
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