Friends of the Library

Is it required or advised that the Friends group (ours is a separate non-profit) have their own insurance? Monetary restrictions have resulted in our FOL group dropping their annual insurance as they understood it was not "required."

There is a large array of insurance coverage a not-for-profit organization might be required to have, and another, equally large array of coverage this is "optional" but may be advised as wise.

Most of the "required" coverages are due to having employees.

[This question about Friends of the Library and $$$ is from a municipal public library]

We have a newly re-organized Friends group that does not have 501(c)(3) status but would like to accept donations. I know that the library can act as a pass-through for grants but I was wondering if this also applies to undesignated monetary donations?

This issue—the question of a public library acting as a pass-through on an ongoing and open-ended basis for its Friends—is like a mouse seeking cheddar[1] cheese in a maze.

I have always been under the impression that it is illegal for public libraries to fundraise on their own, aside from 2 book sales per year. If a school district public library no longer has a Friends Group, can it host fundraisers? For example, could the library itself host a bingo night and raise money? Can a school district public library send out a fundraising letter?

There are a lot of questions packed into this submission!

Let's take them one at a time.

First question: "I have always been under the impression that it is illegal for public libraries to fundraise on their own, aside from 2 book sales per year." [1]

There seems to be a trend for libraries that have Friends groups to hold fundraisers, donations, and membership drives at the library. In some instances, the library collects money for the Friends and pays it to them at a later date.

Ideally, a public library does NOT handle the money of another entity, even for "Friends."  Ever.

That said, there is no law barring a library from helping out a partner or organization with cash handling for events; this "never" rule comes from risk management, not the law.  

Are incorporated "Friends", who do not receive over $50 thousand, do not have paid staff, and are only able to provide the funds to the library, required to register [with the New York Attorney General] and submit the CHAR500 form?

When one considers becoming a "Friend" of a library, several activities spring to mind:

There are so many ways the relationship between a library and their Friends can get "complicated."

Can you provide a template for an agreement between a library and their Friends?

NOTE: As a primer to this answer, which mostly consists of the requested template, I suggest reviewing the materials in the ever-excellent "NYLA Handbook for Library Trustees,"[1] particularly the guidance and links on page 85.

Is it legal for a Friends of the Library group to hold their funds and not to use those funds to support the library's mission? OR refuse to pay for library program and services when ask by library staff?
Can they lose their 501c3 status, if it is proven that the funds are not being used to benefit the library?

Before we address what may be the clear signs of a dysfunctional relationship between a library and its "Friends," let's explore the basis for the Library-Friends arrangement.