Why nonprofits need management liability insurance

By Dawn Young, Hawaii Insurance Consultants, Ltd.

Directors and officers have a responsibility to ensure the success of their nonprofit organization.  This success depends on decisions made every day.  It is important that board members, employees and volunteers exercise sound judgment and make choices that reflect the organization’s mission. By working together and conscientiously applying resources, organizations strive to meet the needs of those who seek their help.

However, even best intentions may not be viewed favorably. A board member, employee, volunteer or client may find fault, which could lead to damaging lawsuits. Organizations could find themselves facing accusations of misappropriation of funds to allegations of failing to comply with the terms of received grants. Employees and volunteers may allege employment practices are discriminatory, offensive or hostile. Clients may feel an organization has discriminated against them by denying them service or not treating them as equally as other clients, simply due to their class or status.

Nonprofit organizations must be prepared financially to handle these situations.  Responding to the allegations with internal investigations or through legal proceedings can cost thousands of dollars, even if the claims are frivolous. The dollar amount is just part of the cost. Consider time spent away from service, the emotional toll and effect on morale as well as the damage to the organization’s reputation. With a nonprofit management liability insurance policy, an organization does not have to bear these costs alone.

On April 5, HANO will present "Nonprofit Insurance101," a workshop covering managent liability and other types of insurance nonprofits should consider. Click here for more information.

For more information about nonprofit management liability insurance for your organization, contact Dawn Y. Young at Hawaii Insurance Consultants, Ltd., dawn.young@hiinsconsultants.com or (808) 544-3947. HIC is a HANO member-benefit partner, providing Hawaii nonprofits with high quality, competitively priced insurance.