Nonprofits are being hit with the need to cancel events, return donations, and otherwise deal with the impact of closures and social distancing restrictions during the COVID-19 health emergency. To help you manage these issues, RENOSI is providing some answers to frequently asked questions, and other tools. Please let us know as other questions arise. We will continue to provide as many additional resources as we can.
Our nonprofit is closed. Do we have to cancel our events planned during the closure?
Generally, if your event is planned using a local facility, you likely will need to cancel while the location is closed. Always follow the directions of your local, state and federal government and health authorities with respect to holding gatherings of any kind.
Our contract does not have a cancellation provision, or the cancellation provision does not mention epidemics or health emergencies. Can we still cancel? If there are penalties in the contracts, are the penalties enforceable?
Many events will need to be cancelled while businesses and locations are closed, and government officials are recommending or requiring social distancing precautions. If your contract does not include a provision allowing for cancellation due to the current circumstances, the vendor may be able to enforce the penalty provisions. Try to work with the vendor to mitigate the situation. Some ideas include: (1) agreeing to reschedule for a later date, (2) agreeing to a “credit” for amounts paid to be used at a later date, or (3) a reduction in the cancellation penalties so that each party, the vendor and the nonprofit, each share in the hardship.
In some cases, your contract may have an impossibility or force majeure clause. This type of provision excuses a party to the agreement from performance without penalty, fees, or obligations if those obligations are prevented by occurrences beyond their control (“acts of God”). When writing to the vendor about the need to cancel an event, including the reason(s) why, citing for example your contracts cancellation or force majeure clause, or the current requirements or recommendations of state and federal government health authorities.
Should a vendor send your organization a notice and bill for cancellation fees, you may consider waiting to pay the fees. In most cases there is time to negotiate with the vendor and attempt to come to a reasonable agreement. If the vendor hires an attorney and you receive a “lawyer’s letter”, it is still o.k. to try to negotiate with the attorney yourself or hire your own attorney to negotiate for you. Once there are attorneys involved, however, you should communicate through the attorneys rather than directly with the vendor. Should you receive a notice from a court, you may still attempt to negotiate through the date stated to appear in court. The bottom line is that you are generally in a better position to talk and negotiate before any fees or penalties are paid.
We received donations for an event that now must be cancelled. Are we required to return the donations?
We recommend that organizations be as flexible and reasonable as possible. Consider contacting all the donors, whether individuals, corporate or private foundations, advise them of your situation, and offer to refund the donations. If your organization can still use the donations for a future event, you may consider asking the donors if they are willing to let your organization keep the donation for the future event or need.
To the extent that we all can be kind, reasonable and flexible, we can weather the current situation together.
If you have additional questions related to COVID-19, business or other closures and the like, please email us at firstname.lastname@example.org. We will respond as quickly as we can, and provide updates to this blog as questions come in.
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