Liability of Directors of 501(c)3 Community Theater

i am on the board of directors of a non-profit community theater group in texas. our organization owns an historic theater, which is used for our productions and various community events. our new president has negotiated rental deals without board knowledge or approval (a violation of our bylaws), and in one instance, arranged for alcoholic beverages (beer) to be served free to the patrons of the country & western concert she had booked there -- again without board approval. our insurance carrier has advised us that we need to make sure that the promoters of these for-profit events have taken out liability insurance, both general and alcohol-related, on an event basis. our president persists in making unilateral deals and lying to or bullying the board. i am interested in finding out how we can cause her to comply with the bylaws, what our options are if she refuses, and what actions the state or federal government may take if we are found to be in violation of our bylaws. also, i would like a clear statement about whether or not *i* am at-risk to be sued if someone is injured or if a minor is given alcohol at one of these for-profit events. thank you!

You are at risk for personal liability on this. From the facts you give, you are a director and you know of a persistent infraction of rules. Since you know of this, you have a duty to try and stop it. If you do not do what a reasonable director would do in this situation, you could end up personally liable for any damages caused as a result of this situation.

I think you would be wise to issue a statement saying that you oppose such action and therefore if it does not stop, you resign as a director in protest. Otherwise, if you stay on, you should definitely speak to a local attorney about your liability in this situation.