South Freeport Neighborhood Association

I wanted an opportunity to discuss the issue of incorporation as a non profit and have researched the web to see why Associations incoporate as non-profits. The major issues are to avoid personal exposure to being sued; to be able to raise monies through dues, grants etc.; to provide a structure with defined roles. It has been suggested that if we incorporate people will want to sue us! The reality is the reverse -we are all personally at risk if we don't incorporate. If we incorporate then the Corporation can be sued but not us as individuals. Yes, we will most likely be required to obtain Director's and Officers Insurance but that is a relatively small price to pay rather than putting our houses and savings at risk.

From the web:
Individuals are not liable if the association is incorporated. If your group finds itself the target of a lawsuit, incorporation can provide welcome peace of mind. Incorporation protects the personal liability of group members and officers. That is, their own money, homes, vehicles or other property isn't at risk. That's not true of an unincorporated association. A provision in the bylaws may be included in order to indemnify-to secure against hurt, loss, or damage-board members in the event they are sued as a result of board decisions. Indemnification promises that the corporation will repay the board member for costs of defending themselves in lawsuits and/or for costs of judgments against board members. However, such indemnification is useless if the organization does not have funds available to cover the board member's legal expenses.

Further Comments

I spoke with Attorney John Youney and Steve Johnson from GHM Insurance Agency. attorney youney reiterated what I have already stated that the most important reason to incorporate is to sheild the members from personal exposure to lawsuits. Were we to continue as a loose association we are an association of individuals and can be sued individually or collectively if we are speaking as representing the association. This particularly puts your primary speaker- yours truly-at risk. Therefore the recommendation is to move forward with the incorporation as agreed in March. Individuals can select to join GSNA or not or contribute anonymously according to John. He did think that Directors & Officers Insurance could be whittled down to Liability coverage only as GSNA does not own property. He thought the rate would be comparatively quite reasonable. Steve Johnson quoted me $900-$1,000 for full coverage of $1,000,000. with liability thrown in. But if we are only looking at liability it could be much less.