Financial and Strategic Management for Nonprofit Organizations, Fourth Edition

Chapter 2 Managing the Corporation, Its Powers, and Exemption

For an organization to function, it has to have certain specified powers to operate. Its managers must have certain specific powers to act on its behalf. From whence do these powers come? Without these specific powers, negative consequences arising from having taken even well-meaning and benign actions can have negative consequences for the manager, and for the organization. Neither entity can argue that it is not liable just because it didn’t have the authority to act in the first place or didn’t know that it did not have that specific authority. This is the legal principle of ultra vires. Moreover, both the organization and the management could successfully be charged with a diversion ...