Nearly every nonprofit will hold an off-site special event/fundraiser at some point, perhaps at a hotel, church, or restaurant. Let's say you've found the perfect spot. Maybe the venue's owners have even offered to partially donate use of the space, as a way to help support your organization's important work.
Should your nonprofit risk dampening all these warm feelings by preparing a written contract formalizing your agreement about the use of this venue? Absolutely. Here's why and how.
Reasons to Prepare and Sign a Written Contract
A signed contract serves many important purposes, both for your nonprofit organization and for the venue you'll be using. For example:
- A contract forces you and the other party to make very sure you understand each other's intentions. Let's say your organization got the impression that canceling at the last minute if ticket sales were low would be no big deal; whereas the venue owners expect to be paid no matter what. That's the kind of issue to be worked out in advance.
- A contract reassures both sides that you're making a formal commitment. A contract is legally binding, meaning that if either of you fails to live up to your end of the bargain, you can be sued and forced to pay money damages to the other party -- or, in some circumstances, compelled to do the things you promised in the contract. For example, a written contract tells your organization that the venue can't just drop you off its calendar (or fail to provide silverware as promised) without consequences. And it tells the venue that your organization understands when payment must be made in order to keep the reservation.
- A contract helps resolve any later disputes. Let's say, for example, that at the close of the event, you and your volunteers blithely go home, having been told by the hotel rep that "We can take care of the cleanup." But then when you get the final bill, you discover that there was an extra cleanup charge. Or what if you bring in your own person to run the audiovisual equipment, and then discover (as has been known to happen) that the hotel automatically charges you for having its own audiovisual person on-site in case you had questions or problems? A well-drafted contract will answer any questions about what services are included in the venue agreement -- and at what price.
Provisions to Include in the Contract
Now let's talk about what should be in the contract between your nonprofit organization and the venue you're using. Some provisions need to cover basic information that would go into any business contract, while others are more specific to contracting with a venue.
It's likely that the venue will already have its own standard form contract at the ready. But don't be too quick to sign. Check its provisions against our list below (and your own good sense), and ask for changes where needed.
Actually making the changes can be as simple as writing in the margins or adding an addendum, so long as both sides separately sign or initial the change or addendum to make clear that it's part of the agreement. If, however, you're not comfortable signing without making a number of major changes, it might be best to get the help of an attorney. (Check out Nolo's lawyer directory, which provides information about each lawyer's experience, education, and fees and, perhaps most importantly, the lawyer's general philosophy of practicing law.)
Here are the key provisions to include or understand:
- Who's making the agreement. Most every contract starts by identifying the legally responsible parties (your organization and the venue provider), complete with addresses and other contact information.
- Description of the services, spaces, and products included. For example, this might specify that you will be using a certain venue's main ballroom on a certain date and time, with parking privileges, and that the facility will provide catering services, audio equipment and setup, tables and chairs, and a certain number of staff for setup, cleanup, and waiting tables. (If this requires a lot of detail or is easiest to read with the inclusion of maps, charts, and drawings, create an attachment.) You might also commit to booking a certain number of rooms, if the venue is a hotel -- which will be useful if your staff will be staying late or if out-of-town supporters may attend. Ask for discounts on other charges if you make this commitment (and be sure to relay important details to those out-of-towners).
- Schedules and deadlines. For an event, this will mean not only the reservation date, but dates by which each of you must satisfy certain conditions, such as providing a list of menu options or confirming the number of people attending.
- Price. This will probably not be a simple flat fee, though the venue may well require a minimum fee. The fee is likely to depend on factors like the number of guests, how many optional add-ons you request (such as linen, centerpieces, or bartending services), how long the venue's staff end up spending on tasks like cleanup, or how many guests park in the venue's lot. Expect a percentage service charge to be added based on the subtotal amount.
- Payment. You'll likely be required to pay a deposit (which you typically forfeit if you cancel past a certain date) and then one or more follow-up payments. Whatever you do, don't agree to pay the entire amount up-front, which leaves the venue no incentive to provide excellent service.
- Cancellation policy. The agreement should be very clear about the consequences if you cancel -- such as whether you lose your deposit, whether you can get some or all of the deposit back if you cancel by a certain date, or whether you can get the full deposit back by simply rescheduling. Also make sure the agreement specifies what happens if the venue cancels on you. If it has to cancel for reasons beyond its control (such as bad weather, a natural disaster, a strike, or internal damage) don't expect a refund. More likely the venue will try to say that it's not responsible for such events. At least make sure it agrees to give you a 100% credit of your deposit against a rescheduled date.
- Liability for damages. Expect the venue to hold you legally responsible for any liability, loss, damage, or claims caused by the negligence or misconduct of anyone associated with your group -- and to simultaneously insist that you promise not to sue the venue over anything arising out of the event. You can ask for similar return promises from the venue, along with assurances that it carries adequate liability insurance. The venue may also require you to take out insurance for any damage relating to the event.
- ADA compliance statement. Request written assurances from the venue that it's in compliance with its obligations as a provider of public accommodations under the Americans with Disabilities Act (ADA). This includes, for example, guaranteeing access to the meeting rooms, speakers' platforms, and common areas such as rest rooms, and also providing auxiliary aids and services where necessary.
- Dispute resolution. Just in case a dispute later arises between you and the venue, both sides can minimize expenses by having your contract require mediation or arbitration as a first resort, instead of heading straight to a lawyer.
- Signatures and dates. It's not a binding contract until both parties have signed it. The signature section should ask for both parties' mailing addresses, names, and titles, as well as the date on which the contract is signed.
For more keys to your nonprofit's success -- including tips on entering into contracts that meet your nonprofit's real world needs -- get Starting & Building a Nonprofit, by Peri Pakroo, J. D. (Nolo).