Water accident leaves troubles for nonprofit

Foundation: Living Classrooms may face publicity and liability problems.

Harbor Tragedy

March 11, 2004|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

His normally cheerful expression drawn and sober, his voice grave, Living Classrooms Foundation President James Piper Bond has been the public face of an organization in crisis since a Seaport Taxi it operated capsized in a sudden storm Saturday.

While Bond has emphasized his sorrow for the victims and their families and support for his crew, he has another reason to be worried: Lawsuits and bad publicity can devastate a nonprofit organization that depends on the good faith and generosity of donors and politicians.

"In some ways, not-for-profits suffer more, and quicker, than for-profits" in such situations, said Larry Smith, president of the Institute for Crisis Management, a public relations firm that advises businesses faced with sudden adversity.

"They certainly depend on the largesse of their supporters, their financial contributors," Smith said. "They have to respond quickly. They have to be decisive in whatever they do and say to build public support for them. They probably don't have much cushion in the bank."

But if Living Classrooms makes the right legal and public relations moves, say lawyers and crisis management experts, it could emerge relatively unscathed.

For Living Classrooms - which has grown from running a one-boat program for troubled youths to managing a small empire of tourist sites, training programs and a school - the accident is the first dark chapter in a local success story.

Though its name includes the word foundation, Living Classrooms is a charitable organization that uses the money it brings in - such as fees from operations such as Seaport Taxi - to subsidize educational and training programs for young people, including some in trouble with the law. The organization, founded in 1985 as the Lady Maryland Foundation, listed total assets of $11 million on its 2002 annual report.

But in the local nonprofit realm, it has been perceived as a favorite cause and a powerful fund-raiser. Raking in grant after grant while other nonprofit groups struggled, managing a string of tourist sites around the Inner Harbor, packing its board with an enviable roster of prominent business people and politicians, the Fells Point-based organization's star seemed to burn brighter each year.

The group is at work on a waterfront park, to be finished next year, that will expand its headquarters and honor the maritime contributions of African-Americans.

"Those folks do a good job," said Thomas Schweizer Jr., a trustee of the Alex. Brown Charitable Foundation and president of Brown Advisory Securities. In 2000, the foundation gave Living Classrooms $500,000 to stabilize and renovate the oldest industrial building on the Baltimore waterfront as part of the maritime park.

"If people think this was a [freak accident], then I don't think it's going to be too disruptive," Schweizer said. "If they think the pilot shouldn't have left the dock or that it was unsafe ... if it comes out that there was stuff like that, it's going to be negative to Living Classrooms because they own the boat."

Bond played down the notion that the accident would have any negative effects on his organization, saying it was inappropriate to worry about its liability at such a time. He said there is no evidence the organization did anything wrong.

The decisions about whether to change any aspect of water taxis' operations are being made "one day at a time," Bond said. Otherwise, the foundation's other programs are continuing.

Immunity from claims

Although lawsuits against the group in connection with the accident may be inevitable, several lawyers not associated with the case said it might be difficult for claimants to recover much for the accident from Living Classrooms.

Maryland is one of the few states in which the courts have conferred immunity on charitable organizations from tort claims. Insurers of charitable organizations are not necessarily immune from tort claims. Living Classrooms does carry liability insurance, said Bond, who declined to discuss details.

Owners of a vessel involved in an accident can ask a court to limit their liability to what the vessel was worth after the incident, said JoAnne Zawitoski, principal and chairwoman of the maritime law practice at Semmes, Bowen & Semmes in Baltimore.

Unless plaintiffs can show that the owners, not just the boat's captain, knew that an accident was likely to happen and failed to prevent it, any damages would be limited to that amount of money, she said.

"I would say it's definitely much more difficult under maritime law for plaintiffs to prevail under these kinds of casualty situations than if this were an automobile accident," Zawitoski said.

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