Nonprofit organizations are non-business entities that provide essential social services for the betterment of the community and its members. They enjoy tax exemption from the Internal Revenue Service and operate on donations.
While these entities generate profits, they utilize them only for social, educational, healthcare, and cultural ventures that are aimed at public welfare. There are many types of nonprofit organizations, and all of them are prone to a number of risks. Before we dive deep into the coverage options, here are a few examples of how nonprofits work day and night for the better of the public and society in general.
The National Centre for Education Statistics revealed that nearly 1.4 million students drop out of school each year. Nonprofits working in the education sector tackle issues concerning opportunity gaps and limited resources in schools that serve minority and low-income students predominantly.
Grants and donations from the government, individuals and corporations fund the applause-worthy mission to improve access to quality education regardless of zip code, skin color, first language, race, or other differences.
Arranging a healthcare camp for natural disaster survivors, a cooking class for promoting nutrition in isolated regions, or housing for refugees – nonprofits provide many invaluable services to communities worldwide. They’re essential to fulfilling core public health goals effectively since they play a key role in improving access to healthcare in underserved geographic areas. Many community health clinics assist needy patients with quality healthcare free of charge. They also provide specialized services for communities coping with the impact of disease outbreaks, natural disasters, or extreme poverty.
Funds are raised by such organizations to educate, inspire, and mobilize youth in developing countries to overcome many challenges and live more productive and healthier lives. Understanding the significance of recreational activities in many cultures worldwide, these organizations raise funds for adult sports, youth sports, local fitness centers, parks, community centers, sports camps, and more.
Religious organizations focus on spreading the message of God to the masses. They arrange mission trips and promote sacrificial giving, donations, and many other selfless tasks that benefit society. IRS recognizes places of worship such as mosques, churches, temples, and synagogues as nonprofits if they fill certain requirements despite the faith or belief of their adherents.
A combination of characteristics is used to identify religious organizations, such as distinct forms of creeds, worship, history, literature, and ecclesiastical governance. These could also include church associations, conventions, seminaries, youth groups, and other integrated auxiliaries. Ecumenical and interdenominational ministries, non-denominational organizations, and nonprofits with the primary aim of advancing religion also qualify.
Even if the goal of your nonprofit is to generate profit to serve the public, it doesn’t mean your organization is safe from risks. Countless liabilities surround nonprofits in the United States. Several things can affect your assets, employees, directors, volunteers, officers, and, most importantly, your mission.
We know risks are scary! But with the right strategies, nonprofits can minimize the risks. Highly experienced agents at Integrity Now Insurance have curated a list of risks, and coverages nonprofits must consider to protect their bottom line.
Identifying potential blind spots is the key to efficient risk management. Once you know the risks and ways to mitigate them, our church insurance experts can help you streamline a comprehensive insurance program that meets your requirements.
Mitigating risks is impossible if you aren’t aware of the potential dangers that surround your entity. The first step in any risk management strategy involves performing comprehensive risk management. Identify risks specific to your organization and its operations, culture, technology, finances, and other aspects. Designate a reliable team for the task so that the process is centralized and streamlined. Make sure the findings are documented properly and shared consistently with all shareholders through appropriate channels. If your organization doesn’t have the expertise or capacity to tackle the risk assessment, don’t panic. Our professionals have ample experience and can help you streamline the best policies. Schedule a consultation right away!
After the risks are identified and documented, it’s time for analysis! Understanding the scope of the risk and the link between it and the potential impact on the organization is essential. Analyze the various functions within your organization that the risk impacts to determine its severity.
Many risks can bring an entire entity to a standstill, while some just cause minor inconveniences—so identifying and analyzing the risk you may have to deal with is integral. It’s also beneficial to determine how likely a certain risk is to occur, along with its impact on the organization. As with risk identification, it’s important that you work with a group of professionals who are familiar with the operations of the type of nonprofit organization you operate to ensure accurate analyses.
Once you conduct these exercises and rate the potential impacts of the risks, you’ll have the information you need to evaluate and mitigate the risks that rank higher on the scale.
The next step is to prioritize the listed risks based on how quickly each one needs to be addressed. Sometimes risks can be time sensitive, such as financial risks that must be treated promptly if a financial audit is approaching. Others may allow a more relaxed response time, freeing up your time to focus on other, more urgent tasks.
But always remember that risks are always evolving in this fast-paced world. Therefore, your organization must adapt to the changes and use newer ways to mitigate or manage risks. While some activities are done once, others must be monitored regularly as needed.
If possible, every risk your committee or an expert identifies must be eliminated promptly. Either try to mitigate it completely or at least contain it as much as possible. It may sound overwhelming, but no need to panic. Connect with the experts in the field the risk belongs to successfully eliminate all the risks.
In addition to making sure you have enough money on hand to cover your most pressing obligations, having an insurance policy can give your organization peace of mind as well as motivate your hardworking employees that you always have their back. Let’s look at the different risks and insurance policies every nonprofit should have to tackle the concerns, followed by some tips on how nonprofits can get the best deal possible.
Risk#1- Directors & Officers
When officers and directors make any decisions on behalf of your entity, they assume a level of risk. Leaders at your organization can suffer damage to personal finances and reputation in the event of a lawsuit. These claims can come from various sources, including clients, employees, donors, regulators, and volunteers.
The policy provides vital defiance dollars to the organization and its board in the event of a frivolous allegation or claims with merit. It also provides coverage when board members are sued for wrongful termination or employment discrimination.
Risk #2- Volunteers
Nonprofits highly depend on the selfless efforts of volunteers to carry out their mission successfully. But if anyone gets injured while serving the organization, they could hold you liable for the damages. In addition, general liability policies often don’t provide coverage for volunteers. So, it’s best to discuss the implications and steps you can take to insure all the volunteering staff under a stand-alone policy.
Risk #3- Sexual Assault
Nonprofits are not immune to sexual assault allegations. In fact, the exclusive characteristics of such organizations, such as unsupervised, frequent interactions between adults and children, make them even more prone to such allegations. Even if not legitimate, sexual abuse allegations involving directors, volunteers, and officers can have appalling consequences for your organization.
Risk #4 – Property
Your property, including office equipment, fixtures, building, signage, data, and other items, plays a crucial role in your organization. If your organization suffers a loss due to theft, fires, vandalism, vehicles, or other factors, your nonprofit can suffer severe financial damages.
Even one incident can impact various aspects of your property, compounding downtime and costs for your entity. Evaluate all the property coverage and determine the areas that need to be protected.
Risk #5- Professional Liability
If your organization provides training, counseling, or other services, professional liability exposures could be extensive. During the provision of such services, any omissions or errors, whether intentional or not, can lead to serious legal implications. Especially if the volunteers, employees, and board of directors of your organization make decisions or provide advice that could harm a third party.
Risk #6- Cybercrimes
Many nonprofits use databases to keep records of clients, members, donations, and volunteers. But cyber exposures continue to be a threat. Nonprofits are an easy target for malicious criminals because they process high-volume financial information of those who give hefty donations. Sometimes employees and volunteers who aren’t trained properly in data safety can leave your company exposed to viruses, ransomware, malware, and phishing scams.
#7- Natural Disasters
Due to global warming, natural disasters are increasing at a rapid pace. A lot of premises are at risk of this threat, including yours. With earthquake insurance plans, you can have peace of mind knowing that you will get access to funds immediately to kick-start your recovery process and get back out there to serve the community and achieve your goals.
Risk #8- Workers Comp Claims
If any volunteer or employee gets injured on the job, your organization can be subjected to hefty workers’ comp claims. Trips, falls, slips and musculoskeletal injuries caused by repetitive sprains, tasks, and strains are common sources of on-the-job accidents.
Sometimes, even everyday tasks related to work can lead to accidents that can increase costs for your organization. A comprehensive risk analysis helps pinpoint your biggest risks so you can develop a proper plan to address them accordingly.
Risk #9- Automobile
Depending on the operations of your nonprofit, volunteers and employees may require to operate vehicles, creating automobile exposures in the process. Although integral to hosting successful events, transporting volunteers, and completing other tasks, their improper use of vehicles could lead to potential accidents requiring major insurance claims. Standard auto policies are also not enough sometimes if volunteers and employees use their own cars for work.
#10- Employee Health
Nonprofit organizations, whether they be religious, political, or charity groups, have a lot to deal with. They have to manage their finances and also raise money to continue their work. But managing the wellness of their employees is just as important as any other area of the business. For a lot of people, a significant area of concern is their health insurance.
Nonprofit organizations work hard to keep their employees happy and healthy. By offering competitive healthcare benefits, they can attract, retain, and motivate the best talent. Nonprofits usually have more modest resources than other organizations, which can make it challenging for them to provide quality coverage without breaking the bank. This is why with some careful planning; your organization can help keep your employees stress-free through group health insurance plans.
With good health insurance, your employees will not have sleepless nights overpaying their medical bills if they end up getting sick or injured.
Tips to Get the Best Nonprofit Insurance
Nonprofit organizations are faced with many financial challenges, and they’re usually unfunded. But these challenges can be overcome by effectively planning for future uncertainties. Fortunately, there are ways you can reduce the cost of your insurance and still have the coverage you need to minimize the risk of disaster.
Part of planning for the future is providing a safe environment that is safe for all the staff and members. Moreover, to make the most optimal use of your donations and grants, you need to ideally find experts that can help you get the best quotes.
Experienced church insurance agents at Integrity Now Insurance welcome you to schedule a consultation to discuss your concerns, identify the risks, and devise a proper risk aversion plan. Their specialized agents are well aware of every personal and professional liability that can take place in religious and nonprofit organizations.
The church insurance brokers can help you select suitable ministry insurance plans to not only help the members, staff, visitors, and clergy feel safer but also avert costly lawsuits and regulate a sense of trust and discipline amongst all.
Known to be one of the most reliable resources for various nonprofit and church insurance needs, Integrity Now Insurance offers an extensive range of services. This includes sexual abuse or misconduct insurance, workers’ compensation insurance, church liability insurance, professional indemnity coverage, church property insurance, directors and officers insurance, commercial auto insurance, and more to safeguard ministries across America.
The best part is that we’ve got a network of AM Best A-rated church insurance companies offering the best premium rates and comprehensive coverages tailored to the needs of each ministry. You can also find all the information you need before getting group health insurance or umbrella insurance.