Director Liability Claims Examples
Below are varied true cases involving actions against non-profit organizations and their directors for acts of alleged mismanagement:

Discontinued Service
A business networking organization ceased their support and assistance in an annual event that acted as a major draw for townsfolk and tourists, allegedly resulting in significant losses to local business owners who looked forward to the economic benefits the activity brought to the area. Suit was brought against the directors suggesting their decision was unreasonable and had resulted in financial harm to the organization's members.

Mismanaged Fundraiser
The employee of a community services organization is alleged to have overzealously 'pitched' its fundraiser to a supplier. The supplier, a manufacturer of products, accuses the organization and its employee of misrepresentation. The legal pleadings filed in court suggest that the supplier was 'duped' into reducing its current production in effort of diminishing local supply prior to the fundraiser as well as taking out loans for the purchase of additional equipment that would be necessary to accommodate the substantial anticipated production. It was noted by the manufacturer that they had been told that 50 local schools were to participate by having their students sell the products in a door-to-door campaign. Ultimately the fundraiser did not go as planned and the manufacturer is seeking compensation for losses.

Membership Suspension
Members of an athletic club were suspended for inappropriate conduct resulting in a claim brought forth against the association and its president for an injunction against the suspension and damages. The plaintiffs were successful, receiving compensation as well as being reinstated as members.

Breach of Fiduciary Duty
A foundation, established for the purpose of running an international event, received a federal government grant earmarked to finance the event. Later, it was discovered that the foundation had exceeded their revenue with incurred expenses. A government investigation concluded that the grant money had been used not as initially represented by the foundation.  Claim was brought against the directors and officers for misrepresentation regarding the use of the funds and breach of fiduciary duties.

General Liability Claims Examples
Most incidents arising from the occupancy of premises, operations or activities of the organization that result in some accidental bodily injury or property damage can be classified as general liabilities. Although not a commercial enterprise, non-profits can purchase Commercial General Liability insurance to protect against such unfortunate incidents.

Trip & Fall
An elderly guest at a social gathering badly broke an arm in a fall caused by a poorly placed extension cord. As an evening dance with the mood enhanced by low lighting, the cord was difficult to see at best but even more so by the aged gentleman.

Chair Collapse
A neighbourhood association held a party to celebrate a park opening. Rented tables and chairs were set up on paved areas in view of the podium where the town mayor would be speaking. When speeches began, guests toward the back stood on chairs for a better view.  When one of the chairs collapsed this set off a domino affect of tumbling people resulting in numerous but relatively minor injuries.

Food Poisoning
A fundraiser 'turned sour' when served food products were alleged to have made visitors sick. The product in question was 'home made' and unfortunately it became a 'recipe for disaster'.

Host Liquor
An organization's evening social event turned deadly later that night when an intoxicated guest caused a horrific automobile accident on the way home. A family in another car was returning from a reunion when the drunk driver ran a red light killing two occupants of this vehicle as well as himself. When the police investigation into the driver’s previous whereabouts revealed attendance at the earlier party, the organization was named in the subsequent lawsuit.

Spring Cleaning
An organization who performed the clean up of the neighbourhood park as its 'service' to the community found itself in 'muddy water' when a discarded needle was later found by children who proceeded to 'play doctor' with it. The parents later sued the organization for the distress caused over its 'flawed' clean up.

Note: Some of the above examples may be generic in nature, applicable to all classes of business - not specifically non-profit organizations.

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