Running a not for profit conference

Conferences come in a myriad of shapes and sizes and have an equally diverse range of human motivation giving them impetus.

Story by Matt Crouch

In the case of conferences in the not-for-profit sector the motivation is almost always a properly motivated desire to advance knowledge within a profession or in a subject matter that has some underlying social value. Such events often coincide with networking functions so that delegates have the opportunity not just to hear industry gurus strut their stuff but also to catch up with each other, share war stories and enjoy a drink.

The fact that the event is to be hosted on a not-for-profit basis and the fact that the motivation is often (genuinely) lofty sometimes leads to a tendency to shy away from matters legal and perhaps to shave some costs off the corners. The feeling (as has been put to me more often than you’d think), is “we are all in this together and trying to do some good - so who’d sue us?”

Now, I have many NFP clients who are well structured and governed and who are exemplary in terms of getting the legal stuff right. But there are many who aren’t and don’t and I can’t say “You know who you are”, because that’s part of the problem – in many cases there is a general lack of awareness of legal issues. It is, of course, never quite so simple as “book a room and they will come”.

There is one fundamental legal issue that is often overlooked, especially in the NFP space. That is - how is the host organised internally?

Many NFP conferences owe their genesis to a collection of like-minded individuals: “Wouldn’t it be great if we could have a conference on that new technique in cancer treatment?” The individuals concerned are often colleagues or participants in the same industry. Often one person takes the lead and begins establishing relationships with a venue and perhaps some potential sponsors. The job gets bigger and other interested helpers join in; a committee is formed.

Sometimes an external professional conference organiser (PCO) is engaged; sometimes it is all done “DIY”; but so often the first step has been overlooked: Who, exactly, is the host? What arrangements bind the like-minded individuals together? If there was a problem, who would be responsible?

The problems, of course, can be economic, ie: the conference is financially unsustainable (“insolvent”) as the funding from sponsors and delegates is insufficient to pay the costs of staging the event. Who pays the shortfall? Alternatively, what happens in the happy event that the conference generates a surplus – and who gets to keep that surplus?

At a more specific level, with whom do the external suppliers and participants contract? Who has the contracts with the PCO, the venue, the AV supplier, caterer, website developer, sponsors, exhibitors, insurers and paying delegates, etc?
There can of course be other kinds of problems – liability arising from accidents, defamation or misconduct. Again, the question is: who bears that liability?

If the host is merely a collection of individuals, it is possible that they are all personally liable – and perhaps they’ll be liable not just for “their fair share” but for the whole lot.

Also, what happens when one or more of the individuals moves on, relocates overseas, or just loses interest? Who, then, is liable for what? This can be very confusing – and off-putting – for the third party suppliers, who properly ask “Who am I dealing with?”

I would always advise a conference host to formalise the internal arrangements by creating a single entity before forming the contractual relationships necessary to undertake a conference. A partnership is possible, but definitely not recommended because of the joint and several liability that partners have for each other.

An incorporated association would afford some protection to those involved but in my view the best approach in most cases is to form a company limited by guarantee. It is a well known and understood structure and one that should make external transactions easier to manage.

As a member of a company limited by guarantee your liability for financial losses and for accident liability, etc, is limited to the amount of the member’s guarantee (normally a token sum).

And while directors of a company can be liable if they personally breach the law or if they trade while insolvent, so long as you don’t give personal guarantees and do not make financial commitments to suppliers if you have reason to believe they may not be paid, you should be able to avoid being lumbered with unlimited personal liability.

For those NFPs who get (or are already) organised internally as incorporated associations or companies limited by guarantee there are a range of other issues that you’ll need to address, such as: Is the conference within the objects of the organisation as stated in its constitution – and does the conference activity put your tax exemptions at risk? These are issues that should be thought through when the company or association is established. Getting this (difficult stuff) right really does require the input of a lawyer and so, yes, there will be some cost; but that is better than being personally liable. We might address these another time.