Common Exposures for Not-for-Profit Organisations
16 January 2023
Not-for-profit organisations provide essential social services that benefit the community and their members. However, even if your organisation doesn’t sell a product or generate profit, there are still a number of potential risks that can affect your employees, volunteers, senior leaders or board members, and most importantly, your mission.
Countless claims can be brought against your not-for-profit organisation. For example, a volunteer could take legal action against senior leaders within your organisation for discrimination or harassment, leading to costly consequences. 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 risks and more—helping you identify potential areas for improvement in your risk management and insurance programmes.
- With each decision they make on behalf of your organisation, directors and officers (D&O) of not-for-profits assume a level of risk. In the event of a claim, senior leaders or board members 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.
- Not-for-profit organisations depend heavily on the kindness of volunteers to successfully carry out their mission. However, should one of these individuals injure themselves while serving your organisation, you could be held liable for any damages. What’s more, insurance cover for volunteers isn’t always available under public liability policies. Accordingly, many not-for-profit organisations choose to insure their volunteers under a stand-alone insurance policy.
- Not-for-profit organisations are at risk for false allegations of sexual assault due to the unique characteristics of their working environment (eg frequent, unsupervised interactions between children and trusted adults). Whether legitimate or not, sexual abuse allegations involving employees, volunteers or senior leaders can have serious consequences for your group or organisation.
- Property—including your building, office equipment, data, signage and similar items—plays a key role for your organisation. And, in the event of a loss caused by fires, theft, vehicles or vandalism, your not-for-profit organisation can suffer major financial damages. What’s more, a single incident can affect multiple aspects of your property, compounding costs and downtime for your organisation.
- If your not-for-profit organisation provides counselling, training, or other kinds of instruction or services, professional indemnity exposures can be substantial. When providing these services, any errors or mistakes—whether intentional or not—can create serious legal concerns. Specifically, should your organisation, senior leaders, employees or volunteers provide advice or make decisions that harm a third party, your not-for-profit organisation could face legal action.
- As more and more not-for-profit organisations use databases to keep records of members, clients, volunteers and donations, cyber-exposures will continue to increase. In fact, not-for-profit organisations are a common target for cyber-criminals, as these organisations often process a high volume of cheques and payment card information when taking donations. In addition, volunteers and employees who are improperly trained on cyber-security measures could put your organisation at risk of ransomware, viruses, phishing scams and malware.
- Depending on the services your not-for-profit organisation offers, employees and volunteers may be required to operate a vehicle on your behalf, creating motor vehicle exposures in the process. While important for transporting volunteers, hosting successful events and carrying out other organisational 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 motor vehicle policies are often not enough.
- Any time one of your employees or volunteers is injured on-site, your organisation could be subjected to expensive employers’ liability claims. Common sources of workplace accidents for not-for-profit organisations include slips, trips, falls and musculoskeletal injuries caused by repetitive tasks, sprains and strains. Everyday tasks related to data entry or setting up an event can lead to accidents and, in turn, increased costs for your business.
For More Information
While the proper risk management practices can reduce certain exposures, no system is 100 per cent effective in ensuring an incident-free workplace. As a result, it’s all the more crucial to work with a qualified insurance broker to not only assess your exposures, but secure the appropriate insurance cover as well. To learn more, contact Hazelton Mountford today.