Not just high-level mistakes, either. Imagine you are a religious movement with a dozen congregations, each of which has considerable but not total autonomy. It’s totally plausible that one rogue clergyperson (employee) or congregation (project) could incur enough liability to overwhelm a single corporation’s insurance and consume the assets of the other 11 congregations and the central office.
There are ways to mitigate that risk—for instance, if RP Special Projects grew and/or took on riskier projects, I would at least consider spinning it off into a wholly owned subsidiary of RP. If done correctly (which can be a bit of a pain as I understand it), that should reduce main RP’s exposure to any meltdowns coming out of Special Projects. In many jurisdictions, you can also get substantial protection for donor-restricted funds if you keep them separate and manage your accounting well. So that could help manage certain types of contagion risk within a sponsoring organization like the hypothetical spun-off Special Projects itself.
Of course, I can’t give anyone legal advice but am merely observing that large-org legal risk can be mitigated to some degree if the payoff from being with a large org is big enough.
It’s totally plausible that one rogue clergyperson (employee) or congregation (project) could incur enough liability to overwhelm a single corporation’s insurance and consume the assets of the other 11 congregations and the central office.
Yeah I think this is a really plausible risk to centralization.
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if RP Special Projects grew and/or took on riskier projects, I would at least consider spinning it off into a wholly owned subsidiary of RP.
This is definitely something we are considering doing.
Not just high-level mistakes, either. Imagine you are a religious movement with a dozen congregations, each of which has considerable but not total autonomy. It’s totally plausible that one rogue clergyperson (employee) or congregation (project) could incur enough liability to overwhelm a single corporation’s insurance and consume the assets of the other 11 congregations and the central office.
There are ways to mitigate that risk—for instance, if RP Special Projects grew and/or took on riskier projects, I would at least consider spinning it off into a wholly owned subsidiary of RP. If done correctly (which can be a bit of a pain as I understand it), that should reduce main RP’s exposure to any meltdowns coming out of Special Projects. In many jurisdictions, you can also get substantial protection for donor-restricted funds if you keep them separate and manage your accounting well. So that could help manage certain types of contagion risk within a sponsoring organization like the hypothetical spun-off Special Projects itself.
Of course, I can’t give anyone legal advice but am merely observing that large-org legal risk can be mitigated to some degree if the payoff from being with a large org is big enough.
Yeah I think this is a really plausible risk to centralization.
~
This is definitely something we are considering doing.