Under what circumstances can a nonprofit corporation indemnify its officers and directors?

A nonprofit corporation can indemnify its officers and directors primarily for claims related to their activities on behalf of the association. This protection is intended to encourage qualified individuals to serve in these roles without the fear of personal liability arising from their actions taken in good faith while performing their official duties.

Indemnification typically covers instances where the officers and directors acted in the best interest of the organization, and were performing their functions as designated by the organization’s governing documents. This provision aligns with the principle of protecting individuals who are working towards the nonprofit’s objectives, provided they adhere to the standards of conduct expected of them, such as acting in good faith and in a manner they reasonably believe to be in the best interests of the organization.

The other scenarios presented do not generally meet the criteria for indemnification. Claims for actions taken in personal capacities or that involve gross negligence are usually not covered, as they do not pertain to the nonprofit’s interests or likely involve actions outside of their official responsibilities.