An Introduction to Nonprofit Financial Statements

The following article is provided courtesy of Cathedral Consulting Group, LLC, a Milwaukee-based firm that helps small and mid-sized nonprofit organizations and private companies to grow their enterprises through the implementation of best practices.   As growth requires vision for tomorrow and an awareness of today’s needs, Cathedral works alongside clients to identify their organizational needs and to implement both long-term and short-term beneficial strategies.

Listening In: Go Ahead, If It’s Not Private (That Is, Eavesdropping)

May a person legally record a conversation or other verbal exchange, such as through a cellphone or other video device?  State laws vary on this issue, and a new law in Illinois is now in effect.  A little more than a year ago, the Illinois Eavesdropping Act was struck down as unconstitutional by the Illinois Supreme Court. The new statute, which became effective as of December 30, 2014, once again makes it a crime to “eavesdrop” but under substantially more limited circumstances that essentially focus on privacy considerations.  (720 ILCS 5/14.)

In Illinois, a person commits the crime of eavesdropping now only if he or she “surreptitiously” uses a device to overhear, transmit, or record a private conversation without consent of all parties to the conversation.  The term “surreptitious” means "obtained or made by stealth or deception, or executed through secrecy or concealment.”   In other words, a person may not hide the fact that he or she records the conversation.  Recording or transmitting conversations in which  “no reasonable expectation of privacy” exists does not constitute criminal eavesdropping.  It is therefore not a crime to openly and obviously listen to another’s conversation or record it. 

How does one know whether a conversation is “private”? Privacy depends, in turn, on whether one or more of the parties “reasonably intended”the communication to be of a private nature, based on all the circumstances.  So if a person expressly stated something like “this discussion is private and may not be recorded,” then any use of a recordation device would be surreptitious and therefore unlawful.  On the other hand, if one person told the other person that the conversation would be recorded, and the other person did note indicate any objection, it likely would be legally permissible. 

Keeping Track: The importance of HR documentation policies

Despite their altruistic purposes, nonprofits generally face the same human resources (HR) problems common to for-profit organizations.  For example, sometimes they need to terminate an employee’s position – perhaps for work performance issues or lack of funding.  Many laws, however, protect employees against termination for the wrong reasons, such as age, gender, or racial discrimination.  A claim of employee discrimination can be extremely costly, time-consuming, and otherwise detrimental to any employer.  Consequently, to avoid such problems, it is crucial that nonprofit employers not only establish good employment documentation protocols but also have effective document retention policies.  Failure to observe proper HR document protocols may expose the organization to legal risk when it becomes necessary to terminate an employee. 

Documentation Can Save the Day

Consider the following case, decided this month:  A nonprofit fired an employee forattendance issues, inappropriate behavior, unsatisfactory performance, and insubordination.  The nonprofit asserted that the employee failed to timely complete required paperwork, used his personal computer to process client information in violation of the nonprofit’s policy, arrived at work late, left work early, and logged more absences than the nonprofit’s policy authorized.  The employee sued on the basis of age discrimination.[1]

Under the Age Discrimination in Employment Act of 1967 (ADEA), it is unlawful for an employer to discharge an employee who is at least 40 years old because of the employee's age.[2]  In this particular case, the plaintiff claimed that the nonprofit’s executives were biased against older workers.  He testified he had overheard a conversation between supervisors, during which someone said: “When they get old, they should get out of here.  I don't know why they would stay.  I don't know why they won't retire and just go.  I don't know why they would want to stay.”  The plaintiff contended this conversation occurred at least three times.  These statements, he claimed, were direct evidence of age discrimination, and that the employer’sstated reasons for discharging him were mere pretext for its discriminatory actions. The plaintiff claimed there was no documented evidence of misconduct or poor performance in the months preceding his discharge.