Friday, December 9, 2011

Sandusky Fallout Continues: Former Charity Settles First Suit, Lays Off Staff; Peregrine on "Where Was the Board"

Second Mile, the youth charity founded by former Penn State Football coach Jerry Sandusky, is struggling to stay in operation in the midst of the hurricane that has hit it.  To settle the first lawsuit filed against it, the group agreed not to shut down or shift its assets to another entity without court permission, according a Bloomberg reportReuters reports that the charity is also laying off employees in the face of a sharp drop in donations. 

At the same time, many are asking where the board of not only the charity but Penn State and, with respect to the separate scandal there, Syracuse University was in the midst of the events that now coming to light.  As Michael Peregrine (McDermott Will & Emery) notes in a Chronicle of Philanthropy opinion, however, the role of boards is to oversee but not to micromanage.  That oversight requires timely and accurate information, due attention from board members, and loyalty to the organization, but it "does not require them to search out illegal or improper activity unless board members see specific warning signs of trouble. Rather, they are expected to insist on a proper flow of information about possible misconduct and to act when they see reason to suspect things are going wrong."  More of course must be known to determine whether the boards at issue here in fact fulfilled the duties they did have, by Peregrine is right to sound a note of caution about rushing to judgment.

LHM

http://lawprofessors.typepad.com/nonprofit/2011/12/sandusky-fallout-continues-former-charity-settles-first-suit-lays-off-staff-peregrine-on-where-was-t.html

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