Mostly a question/discussion item for other museum/non-profit types who solicit and receive donations, especially donations of items that might contain asbestos, lead(in the paint) and/or other known 'bad things.'

Do you offer some sort of written indemnification/hold harmless language to the donor regarding the item's possible issues with these things? And if you do, what wording to you use?

Alternately, do you try to offer indemnification/hold-harmless language in your donation documentation and still get no where with potential donors?

Now specific background:

Am trying to get a large company to donate a railcar they have had for a very long time. They have not been able to use the car for the purpose they intended and now they want to get rid of it (scrap it). They know that the museum I represent wants the car, but their legal department is adamant that they can not 'donate a liability.' Their legal department suggests that their people on the ground could do a full abatement and then donate the car, but the locals are not going to spend thousands of dollars just to give the car away, even if the cost of abatement could be added to the donation value of the car. Interestingly, now the legal department has told the locals that an abatement of some kind will have to be completed even before the company itself scraps the car! ---yet they still do not want to talk about donation. It seems they think it is better to spend the money in-house than have it somehow leave.

I want to be able to offer some kind of decent hold harmless language regarding donations like this, but have no place to start. AND, the legal firm that my museum uses also happens to represent the company, so they are of no use.

A few years ago, this same scenario derailed the donation to the museum of an un-used 25 ton locomotive the company had.

So, if anyone has any constructive insight, boilerplate language, etc, that they can share, we would appreciate it.

Thanks!

rayg

Do you offer some sort of written indemnification/hold harmless language to the donor regarding the item's possible issues with these things?

What does this mean?

...does your written donation form, certificate-of-gift, contract, whatever you locally might call it, include wording that says that the donor is not liable for something that happens to someone else after the donation is made?
Extreme fictitious example, railroad donates locomotive to museum, museum guest two years later falls off of same locomotive, then sues the museum AND the railroad that donated the locomotive. I am trying to get at some kind of wording, text, language that insulates the donor, gets them out of the picture.

I have not personally had such an issue but If the lawyer your non-profit has writes an unconditional waiver releasing them from am liability from making the donation the legal department should be satisfied. I will be following this topic closely being the President of a Local Historical Society. Paul

Instead of a flat out donation would they sell it to your group for a dollar? This may trigger the ability to put in some language the potential seller will be more comfortable with as its not a flat out donation, but a sale to your group.

We have run into the underlying problem on a couple of occasions. Here in the Northwest, you cannot escape from the responsibility for toxic cleanup. I was involved in one situation where the use of toxic materials went back 80 or more years and the deepest pockets were pinned for cleanup costs. In another case, a large corporation wanted to donate some windows that were built in 1898. Their legal department would not allow it until abatement for lead and asbestos had been completed. Apparently, they would have otherwise been a potential responsible party for future mitigation requirements including for people who got sick from the lead or asbestos.

Unfortunately the entities that force things to get cleaned up go for the deepest pockets among all the prior owners. I am advised that indemnity agreements do not have the desired effect because they are trumped by enviro legislation. It is possible you have something like that in your state too.

--Richard

superheater, there is a new web site on the internet which lets you type in words you don't understand and get to web pages that explain them. Try here and here. And FYI, here is a good description on how to write constructive forum postings. That forum has tougher rules than ours.

rayg, you are essentially promising that a) we won't sue you and b) if someone else sues you, we'll cover it. That's a bold promise, precisely as good as your ability to back it up. If you are the typical penniless railroad museum, that is nil. Also your promise to hold harmless does not bind your employees or volunteers. The right way to handle that is to third-party it by buying specific insurance for that purpose, or get a rider on your existing insurance.

Things are a little more complicated with toxic hazards, and I'm talking about the asbestos here, because previous owners are also on the hook for cleanup. The law is designed to prevent polluters from selling off polluted lands to a patsy then just walking away scot-free. Therefore your donor CANNOT unhitch its wagon from the chain of liability for the environmental issue. The answer is insurance, but the cheapest insurance option is to remove the hazard, i.e. send in the bubble boys. Understand that asbestos is one of the most lawsuit-generating substances on earth. You can buy paid advertisements on Google/AdWords for various keywords, and the most expensive keyword is asbestos disease, with some paying $200 a click.

And when I speak of asbestos I am referring to the fluffy loose-fiber stuff that vaguely resembles fiberglass insulation, used as insulation or pipe lagging. That stuff is very likely to spall off micro-fibers into the air, where they lodge in your lungs. If you've ever worked with fiberglass insulation, you know exactly what I'm talking about, the itchy fibers that go EVERYWHERE. When they are asbestos, they are very bad. There is no reason to use asbestos for that purpose anymore, as there are many alternatives.

The hard-fiberboard asbestos is a different deal. There's no risk of microfibers, especially if it is kept painted. Best practices are non-disturbance and containment (i.e. painting to prevent deterioration of the material surface). This was commonly used in house siding, and you do more harm than good in trying to collect/remove it. A house with both asbestos siding and asbestos pipe lagging, you send in the bubble boys on the pipes and leave the siding alone. The same applies on a railcar. First thing I ever did on a railcar was prep a surface like that for paint using a heat gun and scraper. No dust. We are stuck with it in that application, as there is no viable alternative. I was looking at some of the Space Shuttle materials, but they are either too fragile or conduct electricity when they need not to.

Lead is a minor issue by comparison. The hazard is far less serious, mainly being small children eating paint inside their home, and it stunts their development, it doesn't cause cancer. Virtually a non-issue for adults on an industrial site. America is also far more lead-contaminated, with lead being all over the place from solder to tire weights (which fall off and are pulverized on the roads). Which is why all of America hasn't been bubbled and blasted to remove it. You manage lead paint by containment; make sure the paint isn't falling off the unit.

It's all pointless. You're dealing with the legal dept... a bunch of sharks swimming in a school. They know full well what they would do if the shoe was on the other foot... they'd sue everyone starting with the builder, through all the owners they could identify, ending with the not-for-profit that finally allowed the liability to happen. Look at the Soo Line engine that was donated to Minot, ND during the fifties... when the City of Minot realized they had a potential Superfund site because of asbestos leaking from the now deteriorated jacketing, the first thing they did was contact the Canadian Pacific, and ask what THEY were going to do about THEIR engine. CP offered to haul it away and bury in in a landfill. A smart move on CP's part; the hoopla generated got some local folks interested in crafting a solution. I believe CP may have donated some money to help make it happen.

The fact remains that the corporate lawyers know that a hold harmless agreement from a not-for-profit with no assets isn't worth the paper that it's written on; the sharks on the other side will just move up the food chain until they find someone with money, real money that will pay both the settlement and all the legal fees.

The only way out is to find someone in the corporate hierarchy above the law dept that thinks the donation is a good idea; he can just tell the law dept. to cool their jets, it'll be OK, and then it gets done.

By the way, at the beginning of this thread no mention is made of how the receiving organization is actually going to resolve the asbestos or hazard. Unless you flat out do not believe the hazard exists, the donation is not "free".

As annoying as this is, the firm is really doing us all a favor. Hazardous items should not be donated to organizations that are not capable of managing them. Accepting this vehicle and parking it on some rusty siding somewhere is probably not going to please neighbors or county officials.

superheater, there is a new web site on the internet which lets you type in words you don't understand and get to web pages that explain them.


I understand the words, I requested the context, due to some incertitude in usage. As all language is subject to construction, I wanted some clarification in order to ensure construction according to intent of the author. Since I have a background in insurance, I'm used to misunderstanding by non-professionals.

Given your interest in wordsmithing websites I was wondering if you know of a site that lets you type in words to identify and remove such attributes such as contention and ostentation?

For the sincere posters, there's a practical matter here, beyond the inability to provide "indemnification" in environmental matters due to CERCLA. (I'm assuming the original post meant "hold harmless" agreement,as indemnification usually means an arrangement providing financial remuneration after a loss is incurred, as opposed to assuming liability prior to a claim).

Offering such a letter would prove intent-but wouldn't evidence capacity. Given the frequent posts regarding spartan finances, I'm not sure anybody would accept such a letter without a bond or the purchase of some kind of insurance to back it up-which would create another problem. The IRS normally requires a donation to be made with NOTHING in exchange and purchasing insurance with the donor as the payee (especially as a condition of donation) could arguably invite disallowance of the donation based upon receipt of a valuable instrument-insurance.

That having been said, other than for environmental liabilities-I'd be interested in the hearing the resident lawyers offer an opinion as to whether a donated item's use by a donee could create liability to a donor.

As an aside, the former Foster-Wheeler (my mom's former employer and one the sponsors of the C&O 614T/ACE trips in 1985??) which later became the short-lived Morrison Knudsen facility in Mountaintop, PA remained unsold until the building was razed a couple years ago-the land remains unsold-in large part because F-W allowed PCB's in the groundwater.

It seems to me that you have two separate and distinct issues at play here. If I can, let me try to summarize them. Correct me if I am wrong.

1. On the donor side, there is an internal corporate conflict between the legal department and the local operation. Legal says the car can be donated, but only after there is asbestos and lead paint abatement. The local operation does not want to spend money from their own budget for said abatement, and thus would rather just let the car stay in place, and use their money elsewhere in the operation.

2. In order to overcome this obstacle, you wish to offer the donor some sort of hold harmless agreement where by your organization accepting donation of the car, you will hold the company harmless, even if it has asbestos, lead, benzene, methyl ethel terrible, etc. in the car.

As a side issue, you actually have a third problem. Your organization's attorney is also representing this company in other matters, and as such, there would be a potential conflict if they were to draft the agreement. (This conflict may be waived by both parties, but I am not an expert on the laws of the Commonwealth of Pennsylvania, and this is one of those situations where not waiving the potential conflict may be in both sides best interest).

My first bit of advice to you is to find a new attorney (for this issue only) and seek his/her advice on how to offer the aforementioned hold harmless language. Trying to do this yourself is probably not a good idea. I'm not saying this to bolster the legal profession, it is probably just in your organization's best interest to have a legal professional craft this language. If you do this yourself and fail, you can't sue yourself for legal malpractice.

It seems to me that the solution has already been proposed by the company's lawyer, but the local operation will not do it, as they do not want to spend the money out of their budget to do it. Even offering a hold harmless agreement, while it may please the local operation, stands a good chance of not pleasing the corporate attorneys. In this situation, you are going to have to please both parties within the company at the same time.

Finally, with regard to the general ad homenim about attorneys being sharks. Remember, some of us belong to rail preservation as well, and we donate money, volunteer, serve on your board, and often donate our services for free. After spending eight years in the legal profession, including three of those in law school, I fully understand and appreciate why the profession gets a bad rap, but still do not appreciate the generalizations.

Best of luck,

David M. Wilkins
We Don't Get Paid Until You Get Paid, Missouri

Since the abatement must be done regardless of what happens to the car afterwards, offer the owner scrap value for it, which is exactly what they would get if they did the abatement and then scrapped the car.

The term is "joint and several liability".

Sorry David, but there are millions of Americans who despise attorneys because they find any means to win, even if it means violating the spirit of the law. I guess that is probably what riles most of us up about lawyers. Someone has an accident, sue the one at fault. but don't sue the automaker, the paver, the guy three cars back, the surveyor's family who laid out the road in 1856, etc. etc. Lawyers don't care who they sue, and absolutely do not care how much money people have to pay to defend themselves when sued unfairly.

So develop a tougher skin or find a more honorable occupation.

Sir, my skin is tough enough I am willing to post under my real name.

The funny thing I've noticed is that a lot of people dislike lawyers, until they need one. I hope you never need one.

I was pointing out that lawyer-bashing does little to help the original poster with his inquiry. We can damn the profession all we want, but it does little to allow the company to release or donate the car to the car of the society.

David M. Wilkins
Chicanery, Missouri

Whoa, that's harsh. If that rule were actually applied, no railroad museum would ever have anything donated, ever.


Oh, now that's just naysaying. Quid Pro Quo exchange donations are entirely legal. The apocryphal example is PBS - tote bags, Poirot box-sets. There's no problem with this, and there are well-established regulations on how to do these transactions correctly. Your tax deduction is reduced by the value of the exchange. That's all.

The charity must report the exchange. The donor must establish the fair market value of the exchange, and cannot rely on the charity to "make up a number" (except for minor items like PBS tote bags). Officers and other charity insiders are placed under a much finer microscope in this type of exchange.

In this case -- charity swaps remediating the unit for taking the unit -- who benefits? It's rather unclear, lots of benefit both ways... a real tangle. In cases like this, IRS and the courts tend to trust the charity's board. They don't want to Monday-morning quarterback nonprofit boards of directors, because they are not as well informed as the directors.

Now you want to save this piece? It's real simple. Don't waste a dime talking to lawyers, evaluating, or thinking about thinking about. Ink a deal: Museum remediates asbestos, museum gets piece. It's a no-brainer for both sides. And very hard for them to back out of if you do your part, because then they would have gotten a remediation for free, from a charity.

You are correct that the value of the donation is reduced by anything received in value.

However, as to this statement:

"Don't waste a dime talking to lawyers,"

One is reminded of the old saw: "he who has himself for an attorney has a fool for a client".