Company Parties, Liability, and the Nonprofit Sector: What You Need to Know Before You Celebrate
As nonprofit leaders, we love any chance to celebrate our teams. Holiday parties, volunteer appreciation nights, donor receptions—these gatherings are meant to bring people together, show gratitude, and build culture.
But here’s the reality we don’t talk about enough:
Even informal, off-the-clock, “non-official” celebrations can still carry legal and HR liability for your organization.
And in the nonprofit sector, the risks extend beyond employees—donors, volunteers, and community partners can also create unsafe situations.
Let’s break down what nonprofits need to know before hosting their next celebration, and how you can keep your staff and your mission safe.
Are Nonprofits Liable for What Happens at Company Parties? Short Answer: Often, Yes.
Courts and state laws often consider employer-sponsored events to be work-related—holiday gatherings, staff retreats, donor parties, volunteer appreciation dinners, and anything planned, paid for, or encouraged by the organization.
Liability can exist even if:
Attendance was optional
The event was off-site
Staff “weren’t on the clock”
It was framed as a social gathering
And this applies not just to injuries, but to misconduct, including harassment.
A Real Example: When a Donor Crosses a Line
Several years ago, at a nonprofit’s holiday party, a longtime donor—warm, well-known, and deeply invested in the mission—had too much to drink. Over the course of the evening, he asked multiple staff members for a kiss.
It created an incredibly uncomfortable dynamic:
Staff didn’t know how to respond without jeopardizing the donor relationship.
Supervisors didn’t witness the behavior until later.
The employees affected didn’t feel safe, but also didn’t feel empowered to speak up.
Here’s the key point:
Nonprofits don’t just have to manage staff-to-staff dynamics. Donors can present risk too.
And when donors cross boundaries at organization-sponsored events, the liability—and the responsibility—still belongs to the employer.
This is why celebration planning must include:
Clear conduct expectations for all attendees
Strong staff training on harassment
Leadership monitoring behavior during events
Alcohol limits (or eliminating alcohol entirely)
No donor relationship is worth compromising employee safety or well-being.
Alcohol: The Highest Liability Factor (and a Major Nonprofit Ethics Issue)
Alcohol increases risk across the board: injuries, harassment, impaired judgment, and poor decision-making.
For nonprofits, there’s an added responsibility:
Never allocate alcohol expenses to grants or programs.
Most funders prohibit it, and allocating alcohol to a program budget is a compliance risk.
From a risk-management standpoint, the safest approach is simple:
Limit alcohol—or avoid serving it altogether.
If you do allow it, set firm guidelines:
Drink tickets
Early cutoff times
Cash bar or limited hosting
Designated sober supervisors
Transportation options
Zero tolerance for harassment or inappropriate conduct
Alcohol doesn’t cause misconduct, but it reliably amplifies it.
Sexual Harassment: One of the Most Common Post-Event Issues
Company parties are a top source of behavior that later results in harassment complaints.
Why?
Because the environment changes:
Social setting
Reduced inhibition
Power dynamics between staff, leadership, and donors
Blurred workplace boundaries
Nonprofits must provide annual sexual harassment training to all staff.
This includes how to respond if a donor, volunteer, or partner behaves inappropriately.
Someone on leadership should be designated to intervene quickly and discreetly.
Practical, Low-Liability Tips for Nonprofit Celebrations
Here’s how to celebrate safely and intentionally:
✔️ Establish written guidelines for staff and donor events
Clarify behavior expectations and alcohol rules.
✔️ Avoid purchasing alcohol with organizational funds
And never allocate alcohol to program budgets or grants.
✔️ Reinforce your Code of Conduct before every event
A simple staff reminder demonstrates expectations.
✔️ Train all staff in harassment prevention—including donor interactions
Your policies should apply to everyone in the room.
✔️ Make attendance truly voluntary
Say it clearly, not just implicitly.
✔️ Hold events during work hours when possible
It reduces liability and creates more equitable participation.
✔️ Assign sober supervisors or monitors
Yes—this is an actual best practice.
✔️ Plan for donor behavior, not just employee behavior
Boundaries and safety apply across all roles.
A Thoughtful Celebration Is a Safe Celebration
Nonprofits are mission-driven and community-oriented—two reasons why celebration planning must be intentional. Protecting your staff protects your organization, and protecting your organization protects your mission.
So as you prepare for your next gathering, ask:
Are we creating connection? Or are we unintentionally creating risk?
With thoughtful planning, nonprofits can host events that build community—not liability.
Legal Disclaimer
I’m not a lawyer, and nothing in this blog constitutes legal advice.
Every organization’s situation is different, and it’s always best practice to consult your own legal counsel when assessing risk, liability, or compliance related to staff events or donor gatherings.
