Can Nonprofits Be Sued For Defamation?

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A nonprofit group shares online or on social media a report that a business dumps oil or pollutants in a local waterway or labels a business as a “polluter.” At a public hearing on a development project, a representative of a nonprofit opposing the project accuses the developer of bribing government officials voting on the project. During a meeting by a nonprofit on hiring an executive director, a board member claims that a candidate was fired from a job because of mismanagement of money.

Social media and other forms of digital technology can cause these and other false statements to rapidly flow into public eyes and ears. Without filters and controls, creating or disseminating false and injurious statements can open your nonprofit organization to lawsuits and liability that can cripple your organization and its mission.

Understanding the law of defamation, what the alleged victim of a defamatory statement must prove, and what defenses may be available can help your nonprofit shape its practices in advocacy and administration.

What Is Defamation?

“Defamation” means the publication or other communication of a false statement that injures the reputation of another individual or organization. Specifically, the alleged victim of a defamatory statement must prove the following elements to be successful.

False Statement of Fact

You’re open to liability only for false statements of fact. Mere opinions rendered in your posts or at meetings are not defamatory. Opinions, such as a company is “bad” or “not environmentally friendly,” or that a particular person is “ignorant” normally cannot be proved as true or false. These statements escape defamation lawsuits because they either constitute hyperbole, are vague, and cannot be proven as true or false.

Sometimes, even what appears to be a statement of fact may in its context be deemed a joke or made in jest. Such statements are usually not actionable.

Harm to Reputation

Many assertions on their face damage a person or business’s reputation. These include “crimes of moral turpitude,” such as theft, tax evasion, bribery, and murder. Claims that someone has committed fraud, lacks the ability or ethics to perform a job, or that someone suffers from a loathsome disease also fall in the ranks of statements that are defamatory on their face.

In other cases, a statement is defamatory only when considered in context with other circumstances.

For churches or religious organizations, an accusation that a member or the pastor espouses “false doctrines or does not follow the ‘tenets’ of the church” may damage that person’s standing, but will not support a defamation lawsuit. Due to the First Amendment’s “Establishment Clause,” courts do not decide on matters of faith or religious doctrine. To determine whether a claim that a pastor engages in heresy would involve a court impermissibly passing on the meaning of church teachings.

Identifying the Plaintiff

In addition to using the specific name of the victim in the communication, you defame with an accusation toward someone who can readily be identified. This happens when the communication refers to a group that is small enough for a reasonable person to associate the victim with that group. A plaintiff is also sufficiently identified by reference to a business or other establishment that it runs at a specific address or location.

Publication to Third Persons

Without question, social media, emails, newsletters, news releases and speeches are recognized methods of “publication” to third parties for purposes of defamation.

Communications within your organization can also be defamatory, particularly when they concern your volunteers or staff members. For instance, your director “publishes” an accusation of theft by the treasurer if they report it to the board. Strictly speaking, if this accusation is false, then your director has defamed the treasurer. However, your director and the organization may have a privilege in making the report.

Defenses to Defamation

Qualified Privilege

Under the law, a privilege excuses behavior which otherwise results in liability for the actor.

The qualified privilege represents one such defense to a defamation lawsuit. To use it, the communicator must act in good faith, be addressing a matter of concern to the nonprofit, be acting under a legal obligation, and communicate with a person interested in the subject matter.

For nonprofits, the qualified privilege usually arises in the course of investigating or handling wrongdoing within the organization. Staff, directors or volunteers may answer questions from auditors or law enforcement. The board may want a report from staff or the director about matters such as embezzlement, waste of resources, or other incidents involving employees.

However, qualified privilege does not shield your nonprofit from malicious statements. The victim can prove the malicious nature of the statement by showing the speaker knew the it was false, or had a reckless disregard for whether what they were saying was true.

To protect the nonprofit, communications should follow a thorough investigation, have some support in documents or sources that appear to be reliable and be limited to those involved in the investigation or law enforcement. Simply clicking “share” on a post without vetting the source of information or even a cursory examination of its credibility can open the nonprofit to a charge of recklessness. Attempts to control who speaks or writes about a matter by selecting a spokesperson can help show that the organization sought to avoid excessive and disorderly publication.

Public Officials and Matters of Public Concern

Nonprofits frequently enter the arena of ideas – addressing matters of social, economic, and political impact. As such, nonprofits direct comments, criticisms, and claims of varying sorts at public officials or on matters of public concern.

A 1964 landmark U.S. Supreme Court opinion affords nonprofits considerable protection against defamation suits when they comment about government, political, and social issues. Specifically, otherwise false statements about a public official are not defamatory unless the commentator knows the statements are false or has a reckless disregard for the truth. Being merely negligent in an assertion doesn’t expose the nonprofit to a suit when it comes to a public official, though it can when the statement is about a private citizen who isn’t speaking on a matter of public concern.

The First Amendment’s freedom of speech clause heightens the standards when public officials sue nonprofits and others. Allowing public officials or those who speak on matters of public concern to recover for negligently false statements can chill speech, robust debate, and the ability to hold governments and businesses accountable for their wrongful actions.

Liability Insurance

Even a successful defense to a defamation suit can financially disrupt a nonprofit and its work. A judgment against the nonprofit could force it into bankruptcy and dissolution. Your nonprofit should have liability insurance to lessen the financial losses from a defamation lawsuit, and to provide the money to defend against such a lawsuit.

Depending on the specific insurer, the advertising portion of a liability policy covers lawsuits and damages arising from defamatory statements. Your insurer will select and pay the attorney fees and other expenses associated with a lawsuit.

Because nonprofits are generally not immune from lawsuits for defamation, your organization should handle publication of information with care. Examine sources carefully and stick to well-known or respected ones, such as law enforcement or official agencies. Determine who should speak for the organization, screen the communication in advance, and exercise diligence in verifying the accuracy of it. Avoiding personal attacks and concentrating on the substance of the issues can also lessen the chances of a lawsuit.

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