Insurance for Non-Profit and Social Service Organizations, including Directors & Officers Liability

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Like most people, when I hear the term "nonprofit organization" I think mostly of the positive influences that such organizations have on our society.

Maybe it’s a charity, helping the homeless, or championing research into the causes of a dread disease, or maybe working to improve educational opportunities for our kids, or protecting our environment, or assisting battered women in getting their lives back together.

Maybe it’s a political organization, advocating issues about which we feel strongly – pro or con, or even a political organization working to reform the political process.

Maybe it’s a business or fraternal organization; maybe a Chamber of Commerce, through which we can not only network with our peers at weekly or monthly dinners, but also pitch in on local community issues, such as a blood drives, food for the homeless, or eyeglasses for those who cannot afford them.

Maybe when you think of a "nonprofit" you think of Santa Claus on the corner around the holidays, ringing his bell next to a kettle filled with nickels, dimes & quarters. Maybe the local YM or YWCA, or YMHA; the local Boy Scout Troop; 4H Club; Meals-on-Wheels . . . or, maybe it’s your own church, temple, synagogue, mosque, or meeting house; a school; or even a alumnae/booster organization for your alma mater.

Yes, nonprofit organizations play a major role in all of our lives; even if we don’t participate directly.

From an insurance standpoint, however, nonprofits are generally held to the same degree of responsibility – and therefore, potential liability – as most any other business. Yes, under certain circumstances, both state and federal laws do provide a limited degree of protection, however these "shield" statutes are by no means universal.

A nonprofit organization is generally held to the same standards of non-discrimination in matters of employment. A nonprofit often has to be extra careful with how it raises and spends it money, since the various forms of tax-exemption all come with very specific guidelines; a violation of which could cost the organization its tax-exempt status, thereby triggering potential penalties for those who have contributed. A nonprofit organization often has to wrestle with the difficult issue of accountability to both its members and its constituents.

Not too long ago, being asked to serve on the board of directors of a nonprofit organization was considered a great compliment – with very little downside. It still is. Now, however, potential directors realize that they can be held personally responsible – and, therefore, personally liable – in the event of a claim being made against the organization. More and more board candidates want to see that the organization is properly protected against liability claims.

Key insurance issues that all nonprofit organizations – large and small – should consider, include:

	DIRECTORS & OFFICERS LIABILITY: Remember, you do not necessarily have to have done anything wrong for someone to make an allegation, file a lawsuit, or cause a government agency to begin an investigation. Even if the matter is dismissed, the organization, its directors, its trustees, its officers, its employees, and even its volunteers still may be faced with the substantial costs involved in defending such an action, including attorneys fees, investigations, and time. A well designed nonprofit D&O liability policy will respond to the unique exposures of the particular organization.
	EMPLOYMENT PRACTICES LIABILITY: Simply the fact that it’s a nonprofit entity does not, in most instances, relieve the organization from the responsibility to handle matters of employment in the same non-discriminatory manner that is required of a for-profit business. In fact, employment practices claims are now the #1 cause of actions being brought against nonprofit organizations these days. Some directors & officers liability policies automatically include coverage for employment practices claims.
	FIDUCIARY LIABILITY: A nonprofit organization must be very careful about how it raises and spends its funds. Allegations of mismanagement, misappropriation, waste, or self-dealing, can be made by donors, members, government agencies, or even potential beneficiaries.
	PROFESSIONAL LIABILITY: Should an organization be involved in rendering any sort of professional service or referral, it needs to be covered for professional liability (also referred to as, "errors & omissions" or "malpractice"). Even if those actual providing the services - such as doctors, therapists, consultants, etc. - carry their own insurance, this may not properly protect the organization.
	GENERAL LIABILITY: Some organizations need coverage for such things as "bodily injury", "personal injury" or even "owned & non-owned automobile liability". All of these risks are excluded from a directors & officers liability policy, though some carriers offer these as options within a comprehensive nonprofit insurance package.
	SPECIAL EVENTS LIABILITY: Should an organization hold a fundraising event, a street fair, a dinner/dance, a picnic, etc., liability coverage can often be written very economically on a per-event basis. Special event policies can also include coverage for such things as liquor liability, cancellation due to weather, non-appearance by a celebrity, or any one of many potential risks involved in planning a major event.

Whether you are just getting your organization off-the-ground; whether you’re ready to "take things to the next level" with a major donor or fundraising campaign. Possibly, you are courting a well-connected member of the community to serve on your board of directors. Maybe your organization is already well established in the community. Whatever your situation, I would be pleased to work with you and your fellow directors and officers on a comprehensive review of your organization's insurance coverage.

As always, there is never an obligation – but I think that you will be pleased with the resources I have available for nonprofit organizations of all types and sizes. If you wish, I am happy to meet with your organization's accountant and attorney.

Simply click here and fill out a quick, easy form. If you’d prefer, you can call my "personal assistant" line, 24-hours a day, at 877-320-4061. The system will attempt to locate me, and will automatically connect you if I am available. If I am unable to speak with you when you call, you will be able to leave a voicemail message. I'll get back to you promptly.

Of course, you can also e-mail me at, insurance@insurance4nonprofits.com .

I look forward to speaking with you soon!

Bruce R. Swicker