MORE NON-PROFITS START DEMANDING VOLUNTEER NDAS
We were recently asked a question about NDAs for non-profit organizations by someone who had been asked to sign one. In light of that discussion, THE EASTON GAZETTE did some research on NDAs.
Non-disclosure agreements seem to be more prevalent than ever. Most of the time, we hear about non-disclosure agreements (NDAs) as they apply to high powered CEO's leaving their positions or individuals involved in settlements of lawsuits. But now we are hearing about them in the context of local, small non-profit groups. What is an NDA?
A non-disclosure agreement (NDA) is a binding contract that obligates one or both parties to keep specified information confidential and to refrain from disclosing or misusing it. An NDA protects trade secrets, client lists, financial data, product designs, and other proprietary information. Parties sign NDAs before sharing sensitive material during deals, employment, or negotiations. Are NDAs Legally Enforceable?
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The practice of getting people to sign non-disclosure agreements applies in many different situations. For example, an employee either is hired for or leaves their job, and they may get slapped with signing an NDA by their employer. Some employees may sign an NDA upon retirement. That NDA must specify a particular time period for which that NDA is in effect. It also cannot use retirement benefits as leverage for signing an NDA. In other words, an employee cannot be coerced to sign with a threat of losing or reducing retirement benefits or health care.
are non-disclosure agreements enforceable?
Mostly, yes. However, there are clear stipulations to when NDAs are enforceable and when they are not.
NDAs are enforceable when they identify clearly defined confidential information. In other words, the NDA must specify a reasonable scope of information that is protected. It cannot just be a general statement that makes everything protected.
The parties, disclosing and receiving, involved in the NDA must also be clearly defined and both parties must receive something for signing, employment, access to information, or a business relationship. Neither party may be coerced to sign the agreement.
NDA's cannot cover illegal activity.
When NDA's fail it is generally because of an unreasonable duration for the NDA, a vague designation of what is and isn't covered, an application to an existing employee without giving them anything new for signing, or an attempt to hide fraud, safety violations or illegal activity.
So, for example, if a corporation attempts to get an employee to sign an NDA so that employee will not disclose fraud of any kind, the NDA is invalid.
Are NDAs Enforceable? What Makes an NDA Legally Valid | Vindato | Vindato
What happens in court with NDAs? In Maryland courts, standard contract principles apply but authorities often scrutinize the broad reach of an NDA and any public-policy conflicts.
why do non-profits ask volunteers to sign an nda?
While it is fairly clear why corporations ask people to sign NDAs, it is a little less clear why a non-profit organization would ask volunteers or board members to sign one. Volunteers are legally capable of signing an NDA. NDAs for non-profits face the same requirements as those of for-profit corporations.
Usually, non-profits use NDAs to protect donor lists, client records, proprietary materials, internal financials, event plans, marketing campaigns, etc. There are limits for NDAs. They cannot limit volunteers from disclosing fraud, misuse of donor directed funds, conflicts of interest, safety violations, abuse or neglect, or violation of state charitable trust laws. An NDA cannot be an attempt to silence whistleblowers.
Any information that is public cannot be restricted by an NDA, even retroactively.
Maryland courts apply standard contract principles but add scrutiny when nonprofits receive public funds or operate in regulated spaces (education, human services, historic preservation).
In Maryland the following apply to NDAs:
- Volunteers reporting misuse of donor‑restricted funds are protected under charitable‑trust doctrine.
- NDAs cannot interfere with AG investigations or public‑fund compliance.
- NDAs covering board governance, conflicts, or related‑party transactions are often unenforceable if they impede oversight.
- If the nonprofit is a public charity, courts look closely at whether confidentiality claims are legitimate or just shielding dysfunction.
When non-profits do ask volunteers to sign an NDA, it is often to silence criticism, board misconduct or mismanagement, or to control narratives in small town political environments. This is particularly true in Maryland’s Eastern Shore, where nonprofits often intersect with municipal politics, historic‑property stewardship, and donor‑restricted funds.
If a volunteer does violate the NDA, a judge can order a volunteer to stop disclosing confidential information, return documents or erase/destroy sensitive information. Rarely will a court award a monetary penalty to volunteers who violate an NDA. The non-profit would have to prove a material loss.
Why would a non-profit suddenly ask board members/volunteers to sign an NDA?
A non-profit suddenly requiring an NDA may be caused by a specific governance trigger, a new perceived risk, or an internal conflict. Legitimate reasons could be:
Major confidential negotiations — property acquisition, merger discussions, large grants, or donor agreements.
Sensitive donor information — new major donors, donor‑restricted funds, or estate gifts.
Client confidentiality — especially in human‑services nonprofits.
Legal matters — pending litigation, investigations, or compliance issues.
New strategic initiatives — rebranding, restructuring, or leadership transitions.
These are the reasons that cause regulators — especially Maryland’s Charities Division — to scrutinize a nonprofit's sudden actions:
- Silencing dissent or criticism — often appears when board members challenge leadership.
- Preventing disclosure of mismanagement — NDAs cannot legally block reporting of wrongdoing.
- Hiding conflicts of interest — especially in small‑town nonprofits with overlapping personal relationships.
- Controlling public narratives — leadership trying to prevent board members from speaking to donors or the community.
- Fear of whistleblowing — NDAs cannot override charitable‑trust obligations or state whistleblower laws.
- Board infighting or factionalism — NDAs used as a weapon in internal disputes.
These motives often lead to unenforceable NDAs and regulatory intervention.
The sudden request could be due to a change in the non-profit's risk profile. For example, that could be due to new sensitive information regarding the non-profit, leadership feeling threatened, a whistleblower situation identified, a governance crisis developing, or an attorney or consultant has recommended it.
Nonprofits rarely adopt NDAs because of confidentiality alone. They adopt NDAs because someone on the board has started asking questions leadership doesn’t want answered publicly.
NDAs are often a reaction — not a proactive governance tool.
what should you do if you are asked to sign an nda for a non-profit?
The first thing you should do is slow down, evaluate the situation, and protect your rights. Understand exactly what the NDA covers. Ask for a list if you must. If the agreement is overly broad, perpetual, or avoids legal reporting, those are red flags.
Ask why the NDA is suddenly necessary. Ask leaders to explain the specific confidentiality risks this NDA is intended to address. If they cannot give a concise, reasonable answer, that is a red flag.
Check for unenforceable or prohibited clauses regarding whistleblowing, reporting misuse of donor directed funds, reporting of board misconduct or conflict of interest, restrictions on communications with auditors, regulators or the Maryland AG, or block discussion of public information. If necessary, ask for deletions or revisions particularly if there are clauses regarding punitive actions. Compare the agreement to other NDAs as a reference.
Consider whether signing conflicts with your fiduciary responsibilities. If the NDA would prevent you from fulfilling those duties — for example, by blocking disclosure of wrongdoing — you should not sign it. Think about asking for advice from an independent lawyer.
Someone who works in the non-profit sector said they had never heard of a non-profit organization doing that in all of their years of work. For one thing, non-profit organization information is public information, so what are they hiding?
Even the smallest of non-profit organizations can become overly protective and sensitive about disclosure of their financial information and activities. As non-profits are scrutinized more than ever before, NDAs will become more common.
Are Non-Profits Truly What They Claim To Be? - The Easton Gazette
Maryland Non-Profits Earn Millions Despite Being Non-Compliant - The Easton Gazette
Some of the information in this article was generated by research conducted through artificial intelligence.
