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Non-Disclosure Agreements for Non-Profits: Do I Need One and What to Consider

 



You’re the founder of a budding non-profit organization, and it’s been a flurry of activity drafting numerous documents to get set up: a charter, bylaws, internal policies and governance documents, etc. But what is another thing you might want ready when onboarding your team? A Non-Disclosure Agreement (“NDA”), also known as a confidentiality agreement. An NDA is a binding legal contract between two or more parties that lays out what information can be shared and for what purposes, while restricting access to other third parties and outlining what will happen in the event of a breach.[1]

 “Do I really need one? I don’t think I have any trade secrets or that kind of stuff to protect…”

Is it necessary? Perhaps not, but it is recommended if you believe you have information you want to protect. NDAs are not confined to protecting trade secrets or intellectual property. They can be drafted to protect any written or oral information you may deem sensitive and confidential. From marketing and branding materials, to any board of director meeting minutes, financial and accounting information, client or partner information, and to strategies and action plans being brainstormed in the meeting room. All of these, and more, can fall under an NDA. With carefully crafted language, an NDA can be forward-looking and capture information that you may not be able to think of concretely as confidential right now, but that may come up in the future as your organization structure and membership expands. To be clear, however, an NDA cannot protect information from disclosure if the law compels it.

“Alright, I’m convinced. How do I make one? Do I write it from scratch?”

Let’s rewind a bit. Before we talk about drafting one, you need to consider a number of things to think about with your management or board. This includes, but is not limited to (in true lawyerly fashion), the following:

               ·      Parties. Who do you want as parties to the document (aside from your non-profit) and do                        you want the agreement to cover your affiliates or related organizations?

                    Depending on who the other party or parties are, consider if they need different degrees of                     disclosure restrictions. For example, you may want stricter restrictions on employees                                versus directors, who may need flexible language to allow them to discuss confidential                            information to authorized parties outside the organization in order to do their job                                    effectively. An NDA for internal members may also be different from an NDA with partner                     organizations and third-parties.

             ·         Unilateral or mutual? A unilateral NDA is when only one party (the non-profit in this                            case) is disclosing the protected information, whereas a mutual NDA involves both parties                     disclosing  protected information.

        Typically, the scope of a unilateral NDA is more straightforward compared to a mutual                NDA. For the latter, you may need to work and negotiate with the other party involved                when drafting the parameters of what gets protected and what will happen in the event the         agreement is breached.

·           Definition. What is “confidential information”?

        As mentioned before, confidential information can be all-encompassing and forward-                   looking, but you should be able to give concrete examples so that the other party has a                better idea of what they should be keeping within the organization. This is especially                    helpful for intangible information (e.g., a private conversation between you and a third-               party). Additionally, what is deemed confidential may expand or contract depending on                who the other party is. Thus, it would be helpful to have a meeting with your management        team to discuss the umbrella of items that you want to include. You can also consider                   explicitly stamping documents as “confidential information” and capturing that in your               NDA.

·       Exceptions. What is NOT confidential and is therefore allowed to be disclosed? What                  situations can the other party be flexible in with regards to confidential information?

      Not everything should be confidential, otherwise how would any communication happen in       the organization? Consider what types of information should be explicitly excluded from             the confidential information definition and what circumstances may lead for necessary                 flexibility in discussing confidential information. Naturally, anything not captured in the              definition is fair game, and so is any information already published in the public or has been       de-classified from its confidential status.

       Note: you can also flesh out these exceptions by making a more in-depth policy document           that the agreement can refer to. 

·       Disciplinary actions and remedies. What can I do in the event of a breach?

      In the event of a breach, you may reserve the right to take internal disciplinary actions                   (e.g., a  warning system) or to pursue legal remedies (e.g., an injunction, damages, and so            forth).     Make sure that these actions comply with state law.

·           Termination. Should the promise to not disclose end at the termination of the work                    relationship? Or should it go for a few years or even indefinitely beyond, if possible, the            relationship?    

        Consider extending the life of the NDA beyond the time of the actual working relationship.         Plainly put, you don’t want the other party blabbing about your organization’s top secrets             as soon as you are done working with them.

“That’s a lot of stuff to think about – I have to write all that down myself?”

Yes and no. Thankfully, there are existing non-disclosure agreement templates that you can use. However, this does not mean that you should stick to the first one you find. Take your time exploring different templates, as they can vary in terms of the clauses involved, the tone, format, and structure. For example, you may not need or want a five or ten-page NDA with formal language and complicated legalese right off the bat. It’s important to pull from different samples and edit them to fit your needs. You should also make sure the agreement you use complies with any relevant state laws.

It can also be helpful to have a lawyer review your NDA – maybe the Community Enterprise Clinic can help you with that?


 By Joanne Chua 


[1] https://legal.slac.stanford.edu/ndas

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