Legal Question in Tax Law in Delaware

501 (c)(3) Board of Directors Confidentiality Agreement

Hi,

I am a board member of a 501(c)(3) non-profit trade organization (appliance repair shop owners) in Delaware. I was there from the beginning and was active in forming the original bylaws. I've recently been asked to sign both confidentiality and non-disclosure agreements as a board member, severely limiting the communications I can have with outside parties regarding even the nature of the organization's activities. The board positions are unpaid, and there is no compensation given whatsoever (we pay our own travel and all other expenses associated with our annual conference, and get no ''comps''). I felt strongly that the documents I was asked to sign went too far in restricting my activities and communications. The explanation given was that the confidentiality and non-disclosure agreements were a requirement of filing the IRS Form 990 and associated tax docs. A cursory review of the IRS instructions showed no such requirements (since none of us are ''disqualified'' or receiving ''excess benefit'' from the organization). In addition, the copy of bylaws I was given citing these requirements were not the same ones that I voted on a board member! I will be asked to step down if I don't sign. What do I do?


Asked on 4/08/08, 10:34 pm

1 Answer from Attorneys
Lawrence Graves Coolidge & Graves PLLC

Re: 501 (c)(3) Board of Directors Confidentiality Agreement

Unless you have some strong reason for remaining affiliated with the people who are doing these things as you have described them, I would advise resigning immediately. People who are playing fast-and-loose with by-laws and asking for unwarranted concessions on non-competition and confidentiality are not worth the time and aggravation.

Best wishes,

LDWG

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Answered on 4/09/08, 11:45 pm


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