What Are Your Nonprofit Organization Risks?
Nonprofit organizations provide essential social services that benefit the community and their members. However, even if your organization doesn’t sell a product or generate profit, there are still a number of potential nonprofit organization risks that can affect your employees, assets, volunteers, directors and officers, and most importantly, your mission.
Countless claims can be brought against your nonprofit. For example, a volunteer could sue your directors and officers for discrimination or harassment, leading to costly litigation. Additionally, should an individual injure themselves at one of your events or on your property, they could bring a claim against you. The list below provides an overview of these nonprofit organization risks and more—helping you identify potential blind spots in your risk management and nonprofit insurance programs.
Just a Few of Nonprofit Organization Risks
Directors and Officers (D&O): With each decision they make on behalf of your organization, directors and officers (D&O) of nonprofits assume a level of risk. In the event of a claim, nonprofit leaders can suffer damage to their reputation and personal finances. What’s more, D&O claims can come from a variety of sources, including employees, clients, volunteers, regulators, and donors. Find out about our Nonprofit D&O Insurance options.
Volunteers: Nonprofits depend heavily on the kindness of volunteers to successfully carry out their mission. However, should one of these individuals injure themselves while serving your organization, you could be held liable for any damages. What’s more, insurance coverage for volunteers isn’t always available under general liability policies. Accordingly, many nonprofits choose to insure their volunteers under a stand-alone insurance policy.
Sexual Assault: Nonprofits are at risk for false allegations of sexual assault due to the unique characteristics of these organizations (e.g., frequent, unsupervised interactions between children and trusted adults). Whether legitimate or not, sexual abuse allegations involving employees, volunteers, or directors and officers can have catastrophic consequences for your group or organization.
Property: Property that includes your building, fixtures, office equipment, data, signage and similar items—play a key role for your organization. And, in the event of a loss caused by fires, theft, vehicles or vandalism, your nonprofit can suffer major financial damages. What’s more, a single incident can affect multiple aspects of your property, compounding costs and downtime for your organization.
Professional Liability: If your nonprofit provides counseling, training, or other kinds of instruction or services, professional liability exposures can be substantial. When providing these services, any errors and omissions—whether intentional or not—can create serious legal concerns. Specifically, should your organization, board of directors, employees or volunteers provide advice or make decisions that harm a third party, your nonprofit could face legal action.
Cyber Crime: As more and more nonprofits use databases to keep records of members, clients, volunteers and donations, cyber exposures will continue to increase. In fact, nonprofits are a common target for cyber criminals, as these organizations often process a high volume checks and credit and debit card information when taking donations. In addition, volunteers and employees who are improperly trained on computer and data safety could increase your nonprofit organization risks of ransomware, viruses, phishing scams and malware.
Automobile Exposures: Depending on the services your nonprofit offers, employees and volunteers may be required to operate a vehicle on your behalf, creating automobile exposures in the process. While important for transporting volunteers, hosting successful events and carrying out other organizational tasks, the improper use of a vehicle can lead to potential accidents and major insurance claims. What’s more, if you allow employees and volunteers to use their own vehicles for work, standard auto policies are often not enough.
Workers Compensation: Any time one of your employees or volunteers is injured on the job, your organization could be subjected to expensive workers’ compensation claims. Common sources of on-the-job accidents for nonprofits include slips, trips, falls and musculoskeletal injuries caused by repetitive tasks, sprains and strains. Normal, everyday tasks related to data entry or setting up an event can lead to accidents and, in turn, increased costs for your business.
Does your insurance agent keep you in the loop with the many nonprofit laws and regulations?
GDI Insurance Agency, Inc. can assist you in understanding the various laws that apply to nonprofit organizations, so you avoid penalties.
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