As a nonprofit leader, your attention is drawn in many different directions in the course of a week, sometimes, all at once. You are responsible to look into the future to ensure the agency is headed in the right direction. You also need to look internally to ensure your programming is effective for your clients and that your team is successfully executing the agency’s current goals.
Throw in recurring full board meetings, committee meetings, fundraising activities, relationship-building, new donor cultivation, strategic partnership development, community relations activities, staff and volunteer issues, and internal meetings – and your days can quickly fill up with important duties only you can fulfill.
At the risk of adding to your sleepless nights, I’d like to add one more area that many leaders either overlook or do not adequately pay attention to— risk management.
No matter what your agency does, it has exposure to claims, lawsuits, and governmental oversight, reporting, and inspections.
It is very easy to overlook your agency’s risk management profile because, after all, you are out there working hard doing good…helping others. Who would possibly want to sue you? Well, the sad answer is, you just never know.
This is why I recommend having an attorney on your board or an insurance agent who is familiar with loss exposures that nonprofit agency’s can have. It is important to understand that even if you purchase large amounts of every insurance out there, you still have uninsured exposures at risk. Here are a few you may want to think about:
15 Nonprofit Risks You May Be Overlooking
- Auto liability exposure
- Premises liability exposure (even if you only rent your space)
- Employee Benefits Administration Exposure
- Employment practices exposure
- EEOC Exposure
- Fiduciary Liability exposure of your board
- OSHA
- Signing contracts on behalf of the agency and thereby taking on certain obligations
- Financial Controls – handling of cash and donations, including check signing activities or embezzlement (yes it happens even to nonprofits)
- Cyber security and protection of donor information
- Sexual misconduct
- Food handling
- Loss of reputation
- Subcontractor exposures from those you hire to do something for you
- Gala or special events exposure
Remember, you don’t have to be guilty or legally at fault to be caught up in a legal proceeding. Proving your innocence is very expensive…
You might want to find an attorney familiar with nonprofit agency loss exposures to conduct an assessment of your specific risks. You should also find a knowledgeable insurer rep to help you purchase the right coverages from reputable, solid insurers.
When evaluating insurance companies, look at their history of insuring nonprofits. Are they long term players or are they new to your segment? What is their reputation for handling claims? Do they tend to get into and then out of certain markets?
There is so much more to consider in this area. I hope you will take the time to have a competent work group complete an assessment of your agency’s risk exposures so you can sleep well at night.