The novel coronavirus (COVID-19) outbreak presents an extremely challenging and dynamic threat to nonprofits, their Boards of Directors, and their leadership teams. Responsible nonprofit leaders are asking important questions:
- “What should we do in response to unfolding news stories and reports of additional cases?”
- “How does COVID-19 impact our public gatherings, childcare provision, and vulnerable persons?”
- “May we travel to conduct nonprofit operations?”
The COVID-19 situation is presently quite fluid, and legal guidance in answering these types of questions will be subject to specific facts, circumstances and applicable law.
Nonprofit directors and officers owe the nonprofits they serve a fiduciary duty of due diligence. In the context of COVID-19, this means board members should be as mindful of COVID-19-related matters as they would be for any safety-related issue. The ordinary legal standard for whether board members have satisfied their legal duty is generally known as “business judgment rule”: What would an objectively reasonable person do in a similar situation?
As nonprofits grapple with still-emerging challenges, here are key practices and initial recommendations based on the current situation, all of which are important for fulfilling due diligence responsibilities.
1. Be Attentive
The growing impact of COVID-19 is not an issue nonprofit directors and officers may simply ignore. To fulfill their fiduciary duties, nonprofit leaders should stay informed and make decisions based on their best assessment of the relevant facts and the nonprofit’s particular context. Leaders should stay tuned to credible information sources, such as the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC). Remain attentive and be prepared to change plans based on new information.
2. Be Clean
The coronavirus outbreak heightens the importance of maintaining basic hygiene precautions – and then some! Encourage all employees, volunteers, and program participants to exercise cleanliness precautions like regularly washing hands, using hand sanitizer and hand wipes, avoiding touching one’s face, and, when sneezing or coughing, covering the mouth and nose with a tissue or elbow rather than one’s hand. Nonprofits should consider installing additional stations for hand sanitizer and sanitizing wipes throughout their facilities to encourage use and support hygienic practices. Additional signage asking “Please sanitize your hands” should further alert patrons of their duty to participate in a nonprofit’s heightened level of care. Make sure work and program areas are clean and disinfect commonly touched areas. As always, be sure to follow safe food handling protocols.
3. Be Warmly Distant
At religious worship services, performances, and other public gatherings, it is advisable to avoid the normally routine hugs and handshakes. It is appropriate for leaders to make an announcement letting people know that they are very welcome, but everyone needs to keep some distance for now. For churches who have the capacity, we recommend serving individual communion and observing hygienic protocols during the preparation of sacraments (e.g. wearing gloves).
4. Be Conscientious About Attendance
Employees, volunteers, and participants who are sick should stay home. It is more important than ever to communicate this concept to such stakeholders, especially those who have a fever or are otherwise ill. We recommend regular announcements of COVID-19-related protocols through all the nonprofit’s ordinary channels of communication (email, voicemail, newsletters, Slack or other internal office communications). It is legitimate to require a doctor’s note or other medical certification before allowing someone to return to work.
The nature of COVID-19 presents many challenging scenarios. It may be that a sick person has a cold or other non-threatening illness, rather than COVID-19. Alternatively, someone could become exposed to another person with COVID-19, only to realize it days or weeks afterward. Appropriate responses to the above scenarios may include the following: (a) requiring exposed persons and those with symptoms to seek testing; (b) developing remote work arrangements and technology improvements to protect those who have not yet been exposed; and (c) requiring temporary “social distancing,” self-quarantines, and other containment measures. These measures may be appropriate on an organization-wide basis or on a case-by-case basis, depending on specific health concerns, work needs, and cooperation.
5. Be Conscientious About At-Risk Groups
Childcare environments are especially ripe for the proliferation of illness, so extra precautions are advisable. Communal toys and books should be disinfected and monitored carefully. If a child is sick, he or she should stay home from program activities. Exposure to COVID-19 could be particularly dangerous for children with compromised immune systems. It may become appropriate to require a doctor’s note, to refuse participation, or to ask that a child refrain from participation in order to minimize spreading illness to others.
Additionally, pursuant to CDC guidance, special attention needs to be directed toward activities or groups targeted toward senior citizens. It may be prudent for nonprofits to consider cancelling these programs or making them available online. As part of its normal offerings, a nonprofit may ordinarily facilitate group transportation for elderly people. Given the general vulnerability of seniors, however, such transportation arrangements should be carefully evaluated, modified, or possibly suspended.
6. Be Communicative
Share information about what is being done to promote safety and care for all. Tell people what they can expect at their workplaces and nonprofit programs. It may bring great comfort to know that a physical facility will be properly disinfected, that at-risk people are required to stay home, and that the nonprofit leaders are staying attentive to health and safety matters. Use each opportunity to demonstrate care and excellence, not to spread panic or confusion.
7. Be Careful with Cancellations and Closures
Should a nonprofit cancel its programs, its conferences, or other activities? This question may best be addressed on a case-by-case basis, with particular attention given to specific geographic locations, news developments, and number of COVID-19 cases in the area. Dealing with COVID-19 is a matter of prudence, and any course of action could have many implications. When deciding whether to hold an event despite health concerns, the “business judgment rule” applies again, with attentiveness to how others are addressing the situation.
For certain contractual arrangements, a “force majeure” clause (FMC) may allow for cancellations without financial penalty. FMC claims require careful analysis of each agreement, and are subject to the requirements of particular state laws. Whether the coronavirus outbreak qualifies as an force majeure event (FME) may depend on specific contract language and judicial interpretation. For example, an FMC may allow the cancellation of a conference only for an emergency that would render the conference “illegal or impossible.” In this case, cancellation due to coronavirus would likely be contractually prohibited, or at least result in financial penalty, since the conference could still be held.
Moreover, FMCs typically say the FME must have been unforeseeable at the time of contracting. But how foreseeable is a pandemic? Force majeure clauses and related disputes raise challenging legal questions, but in lieu of legal action to enforce an FMC, the nonprofit may always ask for a contract’s cancellation, or otherwise seek to amicably negotiate an exit.
A nonprofit’s insurance may or may not cover lost revenues and other costs from cancellations. Does the organization have “business interruption” or comparable coverage? If so, that may be extremely helpful. Commercial liability insurance should be generous – to address potential claims of any personal injury.
8. Be Prudent with Traveling Workers and Program Participants
In this fast-changing environment, it is important to monitor travel issues: at the moment, this applies especially to any travel involving China, Italy, Iran, or South Korea, each of which is under a Travel-3 Health Notice. The CDC has issued guidance recommending that anyone travelling from one of the above countries should stay at home for 14 days after returning to the U.S. and practice social distancing. The following list comes from the CDC, applying to such travelers:
a. Check traveler’s temperature with a thermometer two times a day and monitor for fever. Also watch for a cough or trouble breathing.
b. Stay home and avoid contact with others. Do not go to work or school for this 14-day period. Discuss your work situation with your employer before returning to work.
c. Do not take public transportation, taxis or ride-shares during this time.
d. Avoid crowded places (such as shopping centers and movie theaters) and limit your activities in public.
e. Keep your distance from others (about 6 feet or 2 meters).
These CDC-mandated measures will likely apply under the above “business judgment” rule, so they are good to require of any worker or program participant.
9. Check Participation Waivers
If nonprofit program participants are traveling for nonprofit activities, the use of waiver and consent forms is strongly recommended. It is especially important that such forms be properly tailored and detailed – disclosing potential risks and known hazards.
A waiver’s legally binding effect depends in significant part on the participant’s “assumption of risk.” Such risks should be disclosed. Program participants who travel to participate in a nonprofit’s activities may risk exposure to the coronavirus. In addition, they may get sick or injured. The more specific and detailed the disclosed risks, the more likely the signed waiver will be legally enforceable against a program participant.
Keep in mind that courts tend to disfavor waivers as legally binding agreements. A waiver and consent form that provides a wholesale waiver of all rights thus goes too far. A carve-out allowing for liability from a nonprofit’s gross negligence or intentional misconduct is thus appropriate, and increases legal enforceability.
Waiver and consent forms are not, however, legally binding for minors, since minors lack the legal capacity to contractually waive their legal rights. Nonetheless, waivers can still be helpful in terms of moral suasion, warnings about risks, and for waiver of related parental rights.
10. Maintain Perspective
The coronavirus outbreak constitutes a serious health-related emergency, with implications and further developments very much in flux. Consequently, nonprofit leaders will need to make day-to-day evaluations and prudent decisions, and be mindful of the news, the people they serve, the employees and volunteers they need, and financial considerations too. Stay prudent, attentive, and as healthy as possible, while continually anchored in the nonprofit’s mission.