If you’re looking into insurance coverage for your non-profit organization, you’ve likely already come to at least one big realization: non-profits are very different from other types of organizations, and they require their own breed of diligent legal expertise and financial know-how.
A non-profit is based around the idea that providing for social good is more important than making money, and also that board members are making decisions out of a desire to better their community (and not better their bank account or anyone else’s). That’s a truly honorable thing, but non-profits are also at risk for some pretty particular lawsuits and accusations—which not every broker or insurance service is equally educated about.
Risks Associated with Running a Non-Profit… That Don’t Apply Elsewhere
First, let’s discuss donations. This is a tricky subject that simply doesn’t concern other businesses the way it does a non-profit.
Casual for-profit businesses, big and small, make their money through repeated activity towards a certain cause, rewarded with consumers’ money, which goes to both continued operation and salaries/pay for employees. Apple makes a new high-tech product, the public buys it, and the money goes toward tech for the next product and paying the researchers and developers (plus the salespeople who put it in consumer hands).
Not so with non-profits. A non-profit commits to a mission, then accepts money from people who earnestly believe in that commitment in the hopes of helping their community. Improper acceptance of donations is not necessarily an evil deed every time it arises. While your mind may jump to a nefarious board member who pockets contributions to rent his or her summer home, in fact, non-profits can get in trouble for simply allocating donations to a cause that doesn’t align perfectly with the donor’s expectations, or even accepting money from the wrong person—someone who looks like they may unfairly benefit from the organization’s work, for example.
In a nutshell, the problems facing a non-profit’s operation can be less clearly defined than a for-profit business’s, in a legal sense. If Apple devalues what its customers want, they can stop paying and the company’s stock will fall. If a non-profit, on the other hand, doesn’t use donated funds towards its missions or programs, it can be seen as dishonest and even fraudulent. To protect your non-profit from allegations and lawsuits associated with this type of scenario you need an appropriate insurance program that is best designed by a non-profit insurance specialist.
However, don’t let all this scare you off: non-profits serve vital and well-intentioned roles across the world. Instead, hire someone who can sift through how your organization is run and manage risks for any potential problem areas before they become big trouble.
What Specialists Know About
There are several kinds of insurance a non-profit may look into—Commercial General Liability, Commercial Auto Coverage, Non-owned Auto Liability, Social Service Professional Liability, Improper Sexual Conduct Liability, Directors and Officers Liability, and Umbrella Liability, to name a few.
Here’s the thing. Even if you read up on all your options (which, in fact, you should as you get started with covering your organization), you likely wouldn’t understand every intricate difference, and you almost certainly wouldn’t be able to perfectly forecast which types your organization needs most.
It can’t be said enough: Insurance is complicated. You want someone who knows which types of coverage you should have. You likely won’t need them all, and there’s some you may need more than you ever thought. Maybe your organization has 40 terabytes of donor’s information stored on a computer, and you never thought to invest in a cyber liability solution. This isn’t encouragement for you to try to figure out for yourself which types of coverage you need; it’s too hefty and complicated a goal for someone busily trying to run a non-profit. Instead, enlist the help of a non-profit insurance specialist.