Anyone can bring a lawsuit against a non-profit if it is believed the organization is not following its principles in its operation. Frequent causes of legal action are conflicts of interest and using donations for other than their intent. Accusations can be costly, and a damaged reputation can quickly result in lost donations. A popular veteran’s support organization suffered controversy recently over the salaries of its leadership in proportion to money allegedly spent to help disabled veterans. The more media attention your non-profit attracts, the more you are both helped and harmed. Public awareness both bolsters your reach and viability, but also increases your liability exposure.
Insurance Has a Broad Scope
Directors and Officers for Non Profit Companies liability protection is more comprehensive than the coverage typically offered to for profit organizations. The insurance not only protects leadership and board members, but also all paid and volunteer staff and committee members both past and present. The coverage encompasses issues that non-profits more often face, such as:
- Financial Mismanagement
- Libel and Slander
- Copyright Infringement
- Failure to Comply
Directors of non-profit companies often assume that their exposure to a lawsuit for mismanagement is slim since shareholders are not in the picture to scrutinize profitability. It is important to remember that money is not the only measure of success for an organization, and every company exists to achieve certain goals to which they will always be held accountable.