Introduction
Consider the following nonprofit governance scenario involving AI: Evelyn is founder and CEO of a local nonprofit. Between event planning, fundraising, overseeing operations, and serving as a member of the board, Evelyn has her hands full. With the annual board meeting coming up, she notices the option on her videoconferencing application to automatically generate meeting transcripts. She clicks on the button and uses it to record the annual board meeting. It works surprisingly well. The automated transcription service (ATS) creates a well-ordered, organized record of the meeting’s discussion and produces an outline she can circulate as minutes for the Board’s review. What a time saver! It seems to Evelyn that this is yet another effective way to leverage AI for increased efficiency. Why wouldn't all savvy nonprofit leaders make use of this new tool?
Access to ATS technologies, like the one used by Evelyn, have become widely available to nonprofits in videoconferencing platforms like Zoom AI Companion, Otter.ai, Microsoft Copilot, and Botsify. ATS’s leverage AI’s powerful text generation capabilities to commit videoconference participants remarks to writing. They further summarize and organize such remarks to provide outlines, summaries, and even action items. While the appeal of ATS is clear, nonprofit leaders should recognize that these “automatic note taker” services bring with them a host of legal, practical, and governance risks that differ substantially from well-established approaches to nonprofit board meeting documentation.
Although it may provide a powerful tool, ATS may expose organizations to significant legal risk and create additional unintended challenges. This article addresses ATS use by nonprofits, evaluates related risks, and offers recommendations to mitigate these risks.
What Could Go Wrong? Legal Risks Accompanying the Use of ATS
For nonprofit boards considering implementation of ATS to record their meetings, it is essential to understand the risks presented by use of this new tool. This use of ATS may infringe on protected privacy rights, create costly misunderstandings, discourage director dialogue, and increase the administrative work needed to avoid unintentional disclosures. Each of these potential drawbacks will be examined in turn.
Massive Increase in Scope of Discoverable Information
Perhaps the most serious legal concern is that ATS can transform confidential board conversations into detailed, permanent records that may later be subject to discovery in litigation or regulatory proceedings. Unlike traditional minutes—which are carefully curated, limited in detail, and protected by board-approved protocols—ATS generates verbatim or near-verbatim transcripts that can capture stray comments, unfinished thoughts, or off-hand remarks. If preserved, these transcripts significantly expand the volume of potentially discoverable information far beyond what nonprofit leaders would otherwise expect, exposing the organization to heightened legal risk and expense.
Exposure of Personally Identifiable Information (PII)
ATS transcripts also may capture and store personally identifiable information discussed during board meetings—such as donor names, addresses, financial details, or sensitive information about employees and beneficiaries. Unlike traditional meeting minutes, which are carefully drafted to exclude unnecessary identifiers, an ATS transcript can preserve references verbatim. If stored on third-party servers or retained beyond immediate drafting needs, these transcripts increase the nonprofit’s exposure to data breach notifications required by law, privacy regulations, and reputational harm if PII is compromised. For nonprofits already entrusted with sensitive community or donor data, the unintended creation of a searchable, discoverable record of PII represents a significant governance and compliance risk. Additional legal considerations regarding data privacy and AI more broadly are addressed in our law firm’s related blogs.
Possible Infringement on Privacy Rights
Use of ATS likely constitutes a “recording” under most state statutes, potentially infringing on statutorily protected privacy rights. Some states require consent from all parties to record a conversation, unless the context provides no reasonable expectation of privacy. Notably, the unauthorized use of an “eavesdropping device” without the consent of all parties involved may be classified as criminal eavesdropping (see, e.g., Illinois law’s criminal and civil penalties). Any device capable of transcribing electronic communications is considered an “eavesdropping device,” making the use of ATS without proper consent a risky proposition.[1] Even if the meeting is held in a state that follows a one-party consent rule[2] – such as Indiana and South Carolina – participants may join the call from states with strict anti-eavesdropping laws – such as California, Massachusetts, and Washington. One jurisdiction’s legally recorded conversation may be another’s criminal eavesdropping, making it essential to obtain proper consent from each person present. In addition to criminal penalties, directors using ATS may also face civil lawsuits from parties whose privacy rights have been violated in many jurisdictions.[3]
Complications can also arise in ordinary scenarios—for example, when a director joins the meeting late and misses the initial notice of recording, or when the notification is not sufficiently conspicuous to ensure clear consent. Re-announcing the recording mid-meeting is awkward and disrupts the discussion, so those late disclosures may not occur—leaving consent gaps and added risk.
Misinterpretation of Leaders’ Comments
Additionally, ATS may capture communications in a way that does not reflect context or speaker’s intent, creating misunderstandings and exposing nonprofits – and individual directors – to legal risk. AI’s current state of development lacks the ability to capture nuance and contextual cues on which people rely to derive meaning in conversations, such as facial expressions. ATS rendering of irony – such as that found in jokes or sarcastic remarks – is particularly problematic, since ironic statements may convey the opposite of their intended meaning when transcribed with no clues to their original tone. Humor thus should be used at one’s peril, within the ATS context.
For example, when asked whether he has reviewed a board proposal before a vote, a director might smile, hold up pages of his own review notes, and say “Oh I really couldn’t spare four hours for that … let’s just skip the review this time” – all in a way that makes it perfectly clear to those present that he has in fact reviewed the proposal quite carefully. An ATS transcript of this exchange could, however, convey the opposite meaning, and therefore potentially lead a reviewing court to conclude that the director had completely neglected his fiduciary duty of care with respect to that decision.
Phrases with more than one possible meaning can also cause confusion in the corporate record. Take for instance the phrase “out of pocket”, which in today’s vernacular, may be used to communicate unavailability for work-related tasks, or to reference behavior that is deemed inappropriate. Without nonverbal cues, an ATS meeting transcript might produce a highly accurate recording of the words actually said, while creating a dramatic misunderstanding of their intended meaning.
Discouragement of Director Dialogue
Using ATS to record board meetings may discourage director dialogue and thereby weaken board decision-making. Director obligations to fulfill their fiduciary duties requires open, candid discussions where directors feel free to debate, challenge assumptions, and express diverse viewpoints, including minority perspectives. ATS may consequently stifle essential dialogue, discouraging directors from speaking freely out of concern that their words could be taken out of context, misinterpreted, or later scrutinized in unintended ways. When speech is chilled, the board’s ability to engage in rigorous deliberation and exercise due care is compromised, ultimately weakening governance and decision-making.
Administrative Burden and Unintended Disclosures
While using ATS may seem to expedite the process of preparing meeting minutes, it may instead increase administrative burden on those officers maintaining corporate records. Board meeting minutes are more of an asset and less of a liability when they are kept accurately and concisely – documenting only essential information such as quorum confirmation, key matters considered, due diligence conducted, resolutions adopted, and items for future consideration.[4] Since transcripts capture lengthy conversations verbatim – including internal deliberations not intended for third parties – converting ATS-generated transcripts into valuable board minutes necessitates additional effort to summarize key points, redact sensitive discussions, and ensure accuracy. Maintaining full transcripts in the corporation’s records heightens the risk that confidential information could be exposed, potentially violating directors’ fiduciary duties and the board’s confidentiality requirements. Ultimately, relying on ATS transcripts places a greater administrative burden on the organization while simultaneously increasing legal risk.
Mandatory Disclosures to Members
Last, keep in mind that certain state nonprofit laws may require disclosure of ATS-generated recordings and transcripts to a nonprofit’s members. For example, in Illinois, members of churches, other houses of worship, and other nonprofits hold the right under Section 107.75(a) of the Illinois General Not for Profit Corporation Act to review “the corporation's books and records of account and minutes.” Such language could reasonably be interpreted to include ATS materials as well as written notes taken from board and membership meetings. More properly viewed however, such materials should be interpreted as notes only, and as a best practice they should be deleted or destroyed.
Using ATS Well
Given the above risks, ATS should only be employed if carefully structured and tightly constrained, under protocols that are clearly defined and consistently observed. If such protocols cannot be implemented, it is better not to use ATS at all. If a nonprofit does choose to utilize ATS for board meetings, it should implement strict protocols to mitigate the associated risks, as follows:
1. ATS should not be used as a substitute for written meeting minutes, which serve as an official record of board actions, document key decisions and due diligence, and help fulfill legal and fiduciary obligations. Meeting minutes should be carefully prepared after each meeting to capture essential information while maintaining confidentiality and protecting against misinterpretation.
2. Any use of ATS must comply with the organization’s record retention and destruction policies. Transcripts or recordings should be considered temporary aids for preparing accurate minutes and must be destroyed promptly in accordance with those policies. A best practice is to require destruction or deletion immediately upon board approval of the minutes, since once official minutes exist, there is no legitimate business purpose for retaining transcripts or recordings. In any event, retention or destruction must follow the organization’s formal record retention policy, ensuring consistency, legal compliance, and defensibility in the event of scrutiny.[5]
3. All persons present at a board meeting where ATS or recording devices will be used should give clear consent, and these consents should be documented in the record. If a participant joins after the meeting has begun, the chair should pause briefly to provide notice and obtain that individual’s consent before continuing, ensuring that all participants have knowingly agreed to the use of ATS.
4. ATS service vendors should be carefully vetted, and internal privacy policies should be reviewed for any inconsistencies between planned use of ATS with the organization’s confidentiality and privacy requirements.
5. Any use of ATS must align with the organization’s data privacy policy, including principles of data minimization. Because ATS transcripts may capture personally identifiable information (PII) about donors, employees, or beneficiaries, their use should be reviewed for consistency with established privacy commitments and regulatory obligations. Boards should ensure that only essential information is retained, unnecessary identifiers are avoided, and transcripts are destroyed promptly to reduce the risk of unauthorized access or disclosure.
AI-powered automatic note takers can seem like an attractive shortcut, but for nonprofit boards the risks may likely outweigh the conveniences. Expanded discoverability, privacy pitfalls, misinterpretation of comments, chilled dialogue, and added administrative burdens all point to the need for caution. If a board elects to use ATS, it must do so under carefully crafted protocols that protect confidentiality, ensure compliance with record retention policies, and preserve the integrity of the board’s official minutes. Ultimately, the safest course is to rely on well-prepared traditional minutes, which remain the most reliable means of fulfilling fiduciary duties while safeguarding sensitive deliberations.
[1] 720 Ill. Comp. Stat. Ann. 5/14-1 (West 2024).
[2] Jurisdictions following one-party consent allow a conversation to be legally recorded if at least one in-state participant consents to the recording. See e.g., Ind. Code § 35‑31.5‑2‑176 (2024).; S.C. Code Ann. § 17‑30‑30 (2024).
[3] For additional considerations regarding the risks involved in recording meetings and other organizational events, see our firm’s blog Now Press ‘Record’ – or Not?
[4] For more information on effective meeting minutes, see Resolved! Best Practices for Board Resolutions.
[5] Record retention practices of nonprofit organizations are governed by the Sarbanes-Oxley Act of 2002, as well as state and federal requirements and applicable statutes of limitations. The Sarbanes-Oxley Act prohibits destruction of certain records in litigation-related contexts. For more information on record retention, see Navigating Nonprofit Records Retention Policies.
