Adams Stirling PLC


“[T]he services of directors and officers of nonprofit corporations who serve without compensation are critical to the efficient conduct and management of the public service and charitable affairs of the people of California.” (Corp. Code § 5047.5(a).)

Volunteer Defined. Under federal law, a volunteer is defined to mean a director, officer, trustee, or service provider who performs services for a nonprofit organization or governmental entity and does not receive compensation (other than reasonable reimbursement or allowance for expenses) or anything with a value in excess of $500 per year. (Volunteer Protection Act of 1997, Public Law 105-19, 42 USC 14501 et seq.) A nonprofit organization is not limited to organizations tax exempt under IRS Code § 501(c)(3). It includes any nonprofit organization, whether or not tax exempt.

California's Corporation Code § 5239(b) defines “Volunteer” to mean the rendering of services without compensation. “Compensation” means remuneration whether by way of salary, fee, or other consideration for services rendered. However, the payment of per diem, mileage, or other reimbursement expenses to a director or executive officer does not affect that person’s status as a volunteer within the meaning of this section.

Expense Reimbursement Allowed. Payment of per diem, mileage, or other reimbursement expenses to a director or executive officer does not affect that person's status as a volunteer. (Corp. Code § 7231.5(b), Civ. Code § 5800(b).) For example, if a director buys light bulbs for the common areas using his own money, the association can reimburse him without impacting his volunteer status. Directors should ALWAYS produce a receipt for those items for which they are seeking reimbursement.

Protection from Liability. By statute, volunteer officers and directors are protected against personal liability for mistakes they make while carrying out their duties. However, protections from personal liability are premised on the directors meeting certain standards of conduct established by law. Problems arise when directors (i) become "professional directors" or (ii) they wear two hats, i.e., they become an employee of the association while continuing to serve as a director, thus creating a conflict of interest.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC