New Jersey’s Charitable Immunity Act shields a nonprofit’s organization and its trustees, directors, officers, and volunteers from negligence liability to people who are beneficiaries of the charity’s work. The statute says no nonprofit organized exclusively for charitable or educational purposes, nor its trustees, directors, officers, or volunteers, is liable in damages to a beneficiary for negligence. There’s a companion volunteer-immunity provision in federal law under the Volunteer Protection Act of 1997. It is important for nonprofit leaders to recognize the risks that are covered by statute and the risks that (presumably) are best covered through insurance.
But the immunity does not cover willful or grossly negligent acts, and it does not cover damage from negligent operation of a motor vehicle. And critically, charitable immunity does not protect against breach of contract or against claims arising from commercial and fundraising ventures. In New Jersey, immunity only applies to nonprofit corporations, not nonprofit associations. For that reason I recommend that nonprofit associations incorporate after initial formation. Revenue Procedure 2018-15. Rev. Proc. 2018-15 eliminated the requirement for a 501(c) organization to file a new exemption application or EIN after a corporate restructuring.
If you are a nonprofit leader in New Jersey unsure of your organization’s status and compliance status, it makes sense to request collaboration with an expert in this field to review and discuss the positions.