Charities in DistressCharities in Distress

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Christina M. Mason is a partner in the New York office of Kelley Drye & Warren LLP.

Carolyn R. Caufield is a partner in the New York office of Kelley Drye & Warren LLP.

In times of economic hardship, non-profit organizations confront issues that are unique to their status. Like business entities, charities have responsibilities to their employees and to their creditors. But charities also have obligations to their donors and beneficiaries and are accountable to the community at large to use their assets for charitable purposes — which may impede how those assets are used when responding to financial difficulties.

News of charities with floundering finances and shrinking endowments seem everywhere in recent months. ...