Are You At Risk Being On A Non-Profit Board?

This is great!  You’ve been asked to be on the Board of Directors of a Non-Profit organization.  You’re excited and can’t wait to get to work.  There are a million different ideas coming to mind about what you can do to help the organization and advance their fundraising efforts.  Before you sign on the dotted line, take a step back.  There are things to think about before you begin such a venture.   As a Director of the Corporation you have responsibilities to uphold.

Every decision you make needs to physically, financially and legally be in the best interest of that organization.  This includes best practices in Risk Management and Insurance.  D&O Coverage (Directors & Officers) is part of the insurance program that you should have in place.  It will only help protect your organizations’ assets and the assets of key employees, and fellow board members.

The definition of Directors & Officers Liability Coverage as defined by Travelers Insurance Co states: "Directors & Officers (D&O) Liability insurance helps cover defense costs and damages (awards and settlements) arising out of wrongful act allegations and lawsuits brought against an organization's board of directors and/or officers."

If you are reading this from the Non-Profit organization point of view:

  • You want to make sure you have D&O coverage to attract and retain qualified candidates for your board. Many of these people will require it for their involvement.  They do NOT want to be involved with an organization that may put them at risk.

If you are reading this from the Board Member point of view:

  • You want to make sure your Non-Profit organization has this coverage. Not having it and waking up one day to realize someone is suing the organization and is coming after your personal assets; could change your life.
  • Require your organization to carry Directors & Officers Liability Coverage.

Board members are board members because they want to help and do the right thing.  They want to spend their valuable time focusing on fundraising goals, fulfilling missions and progressing the Non-Profit organizations .  Having to spend time in court, pay penalties and legal fees will drastically reduce your ability to do this and the Non-Profit will surely suffer.

It is critical that you protect yourself, family and your personal assets.  In the words of the mighty Superbowl XI Champions, The New England Patriots,  “Do your job.”  D&O is a responsibility that is absolutely necessary and which should not be taken lightly.

If you would like to take a look at your current policy or are considering adding D&O coverage to your existing policies, I would be happy to speak with you.