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Using an outside provider for technology services, facility maintenance, event management, transportation, or other work can create some separation between the nonprofit and the people performing the work, but it does not automatically eliminate the nonprofit’s potential liability if an injury, property damage, or other dispute occurs.

Responsibility may depend on who caused the problem, how much control the nonprofit exercised, and how the relationship was structured.

For example, if a nonprofit contracts with a separate transportation company, the company generally remains responsible for managing its drivers and operating its vehicles. Similarly, an individual independent contractor who controls how a particular project is completed may be responsible for negligence committed while performing that work.

Georgia law generally provides that an employer is not responsible for the torts of an independent contractor when the contractor exercises an independent business and is not subject to the employer’s immediate direction and control.

The details of the relationship still matter. Calling someone an independent contractor or vendor in an agreement does not necessarily determine how responsibility will be allocated if the actual working relationship tells a different story.

When Can Responsibility Extend Back to the Nonprofit?

A nonprofit may face liability when its own decisions or actions contribute to the problem.

Control is one important consideration. There is a difference between telling an outside provider what result the organization expects and directing how its workers should perform their jobs. The more control the nonprofit retains over the time, manner, and method of the work, the more complicated the liability analysis may become.

Responsibility can also arise when the nonprofit interferes with the work in a way that contributes to an injury or when the contractor’s actions violate a legal or contractual duty that remains the nonprofit’s responsibility.

This can apply whether the person performing the work is an individual contractor or an employee of a larger vendor. The fact that another company employs the worker does not necessarily protect the nonprofit from liability for the nonprofit’s own conduct.

How Can Vendor and Contractor Agreements Allocate Risk?

Contracts can play a significant role in determining what happens after a claim arises.

A short-term agreement with an individual contractor may primarily establish the scope of work, payment terms, and the contractor’s independent status. More substantial vendor relationships often involve more detailed provisions addressing liability and insurance.

Depending on the services involved, an agreement may require a vendor or contractor to:

• Maintain specified types and amounts of liability insurance
• Name the nonprofit as an additional insured when appropriate
• Defend the nonprofit against certain claims
• Indemnify the nonprofit for losses arising from specified conduct
• Assume responsibility for its employees, subcontractors, or other personnel

These provisions do not necessarily prevent someone who is injured from making a claim against the nonprofit. Instead, they may determine whether the vendor, contractor, or an insurance company must defend the organization or reimburse it for covered losses.

Reducing Risk When Working With Outside Providers

The appropriate level of contractual protection should reflect the relationship and the risks involved. Hiring someone for a limited administrative project does not necessarily require the same agreement as hiring a company to provide transportation, security, maintenance, or other services that could create significant liability exposure.

Those risks can sometimes be mitigated with contracts that clearly define responsibilities and establish appropriate insurance requirements. If the scope of the relationship ever changes or expands, it may be worth calling an Atlanta nonprofit attorney to review the agreement and determine whether its terms still fit the arrangement.

Get Guidance on Nonprofit Vendor Agreements in Atlanta

Vendor and contractor relationships can help nonprofits expand their capabilities without bringing every function in-house, but those arrangements can also create legal and financial exposure if responsibilities are unclear.



The Law Office of Cameron Hawkins helps Atlanta nonprofits review third-party agreements, evaluate liability risks, and address contractor and vendor disputes. If your organization has questions about an existing agreement or is preparing to enter a new service relationship, contact our office at 678-921-4225 to discuss your options.