Charity Sued By Donor Alleging Funds Were Misused: D&O Insurance Paid Defense!
The Grant, the New Program, and the Lawsuit from the Funder
My charity received a large grant from a foundation specifically for a new literacy program. A year later, our board voted to divert some of those funds to cover a critical operating budget shortfall. The foundation was furious and sued our board of directors personally for misusing the grant money. It was a serious threat to our board members’ personal assets. Our Directors & Officers (D&O) liability insurance was the only thing that saved them. It paid for the expensive legal defense against the foundation’s lawsuit.
Protecting Your Charitable Mission: Insurance Coverages Every Charity Needs
Your Heart is in the Right Place, But Your Risk is in the Real World
My friend started a charity to provide meals for the elderly. Her heart was full of passion for her mission. Her first meeting with an insurance broker was a reality check. The broker asked, “What if your delivery van gets in an accident? What if a volunteer gets food poisoning from the meals? What if a donor slips and falls at your fundraising breakfast?” My friend realized that even with the best intentions, doing good work is full of real-world risks that require a strong, comprehensive insurance policy to protect her noble mission.
Charity Insurance Essentials: D&O!, CGL, Special Events, Volunteer Liab, Crime/Fidelity!
The “First-Aid Kit” of Financial Protection
A good insurance program for a charity is like a well-stocked first-aid kit. Directors & Officers (D&O) is the most important item, protecting the board. General Liability (CGL) is the big bandage for slips and falls. Special Event coverage is for when you’re away from your home base. Volunteer Accident insurance is for your unpaid helpers. And a Crime/Fidelity policy is the antiseptic, protecting against the sting of internal theft. You need every item in the kit to be prepared for the inevitable scrapes and bruises of running a charity.
Directors & Officers Liability: Protecting Your Board When Making Tough Decisions! CRITICAL!
The Reason I Agreed to Join the Board
I was honored when a local charity asked me to join their board of directors. But before I said yes, I asked to see their Directors & Officers (D&O) insurance policy. As a board member, I have a fiduciary duty, and I could be sued personally for the board’s decisions. That D&O policy is what protects my personal savings and my home from a lawsuit over a budget shortfall or a disgruntled employee. It’s the critical financial protection that gives volunteers the confidence to step up and lead.
General Liability for Your Offices, Service Locations, and Fundraising Events!
The Spilled Drink at the Fundraiser
My charity hosted our annual fundraising dinner at a local hotel. During the event, a guest slipped on a small puddle of spilled wine near the bar and broke her arm. She sued our charity for creating an unsafe environment. Our General Liability insurance, which had an endorsement for off-site special events, handled the entire claim. It’s the foundational coverage that protects our organization from the everyday risk of bodily injury or property damage, whether it happens at our office or at our biggest party of the year.
Special Event Liability for Galas, Walks, Auctions – Ensuring Adequate Coverage!
The Charity 5k and the One-Day Policy
My charity organizes a large 5k race in a public park each year. Our standard liability policy does not cover such a large, high-risk, off-site event. So, every year, our first step in planning is to call our broker and buy a separate “Special Event Liability” policy just for the day of the race. It covers things like runner injuries, spectator falls, and damage to the park’s property. It’s a crucial, temporary policy that we need to get the permit and hold our most important fundraiser.
Volunteer Liability & Accident Coverage: Protecting Your Unpaid Workforce!
The Volunteer, the Fall, and the “Thank You” Policy
A wonderful, elderly volunteer was helping my charity stuff envelopes. She tripped over a box and fell, breaking her wrist. She wasn’t an employee, so she wasn’t covered by Workers’ Comp. It was a terrible situation. Luckily, our charity had a “Volunteer Accident” policy. It’s an inexpensive coverage that pays for the medical bills of volunteers injured while on the job. It was our way of saying “thank you” and taking care of the dedicated people who give us their time.
Crime Insurance / Fidelity Bond: Safeguarding Donations from Internal Theft! Vital!
The Bookkeeper Who Betrayed Our Trust
My favorite local charity was devastated to discover their paid bookkeeper had been embezzling donations for years. She had stolen over $150,000. It was a massive financial blow and a heartbreaking betrayal. Their standard insurance did not cover it. But their separate Crime Insurance policy, which included a “Fidelity Bond,” did. It reimbursed the charity for the funds that had been stolen by the dishonest employee. It’s a vital protection for the donations that are the lifeblood of any charity.
Comparing Insurance Policies for Different Types of Charities (Health, Env, Social Service)
A Cancer Charity vs. an Animal Shelter: Different Missions, Different Risks
A charity that funds cancer research has one risk profile—mostly around managing grant money and protecting donor data. An animal shelter charity has a completely different risk profile. Their biggest liabilities are a volunteer getting bitten by a dog or a visitor slipping on a wet floor. A social service charity that provides counseling has a professional liability risk. The specific mission and daily activities of a charity completely dictate the type of insurance policy it needs.
Does Your Policy Cover Liability Arising from Your Charity’s Core Services? Prof Liab?
We Didn’t Just Give Them Food; We Gave Them Advice
My charity helps people apply for jobs. A client sued us, claiming the resume advice our volunteer gave him was so bad that it cost him a major job opportunity. This wasn’t a slip-and-fall claim. It was a “professional liability” claim based on the quality of our core service. Our general liability policy wouldn’t cover it. We needed a separate “Errors & Omissions” policy to protect us from lawsuits that claim our advice or services caused a client financial harm.
Filing Claims Related to Fundraising Events or Client Services Gone Wrong
The Incident, the Report, and the Immediate Notification
During our charity auction, a valuable donated item was accidentally dropped and shattered. Our event manager’s response was swift and professional. She immediately took photos of the broken item. She got written statements from the volunteers who witnessed it. And she called our insurance broker’s 24-hour line to report the claim before the event was even over. That immediate, documented reporting is the key to ensuring a smooth and successful claim process when things go wrong.
Making a Donation: Feeling Confident the Charity Uses Funds Wisely (D&O Helps Ensure!)
Protecting My Donation from Mismanagement
When I donate to a charity, I trust that their board of directors is making wise decisions with my money. The charity’s Directors & Officers (D&O) insurance is a key part of that trust. It protects the board members from lawsuits, which allows the charity to attract qualified, talented volunteer leaders. It also means that if there is a claim of financial mismanagement, there are insurance resources to handle it, protecting my donation from being wasted on legal fees.
Protecting Your Charity’s Reputation with Crisis Management Coverage? D&O/PR Rider.
The Bad Press That Almost Sank Us
A local news station ran an investigative story that made a false, damaging claim about our charity. Donations dried up overnight. Our reputation was on the line. Our Directors & Officers insurance policy had a special “Crisis Management” endorsement. It immediately provided us with a budget to hire a professional public relations firm. The PR firm helped us respond to the media, communicate with our donors, and begin the long process of rebuilding our community’s trust.
Workers’ Comp for Your Paid Charity Staff Members
Even “Doing Good” Can Lead to an Injury
Working for a charity can be a surprisingly physical job. Our outreach coordinator spends hours a day driving. Our office manager developed carpal tunnel from all the grant writing. And our warehouse coordinator for our food pantry strained his back lifting heavy boxes. Our charity’s Workers’ Compensation policy is the mandatory insurance that covers these on-the-job injuries for our paid staff. It’s the essential protection that every employer, charitable or otherwise, must provide for their team.
Finding Insurers Dedicated to the Unique Needs of Charitable Organizations!
We Wanted a Partner, Not Just a Policy
When our charity was looking for an insurer, we specifically sought out companies that have dedicated “non-profit” departments. We chose a carrier that provides risk management resources, sample safety policies, and has a claims team that understands the unique legal challenges of non-profits. We didn’t just want a company that would take our money; we wanted a true partner who was invested in our mission and committed to helping us protect our ability to do good work.
Cyber Liability Protecting Sensitive Donor and Client Data!
The Stolen Donor List
My charity’s online donor database was hacked. The criminals stole the contact and donation history of thousands of our supporters, including many prominent and private community members. It was a devastating breach of trust. Our separate Cyber Liability insurance policy was essential. It paid for the expensive forensic IT work, the legal fees, and the cost of notifying every single donor about the breach. For any modern charity that collects donor data, it’s a non-negotiable coverage.
Property Insurance Covering Your Charity’s Offices or Facilities
The Fire at the Community Center
Our charity runs a small community center. An electrical fire started in the office one night, causing significant damage to the building and destroying all our computers and files. Our Commercial Property insurance was crucial. It not only paid to repair the building, but the “Business Personal Property” part of the policy paid to replace all our office equipment and furniture. It allowed us to quickly get back to our mission of serving the community.
Coverage for International Charitable Activities? Specialized!
Our Well in Africa and Our Policy in America
My charity raises money to build clean water wells in Africa. This creates a unique liability. What if a well we build collapses and injures someone? What if one of our volunteers gets sick or injured overseas? Our standard US insurance policy provides no coverage for this. We have to buy a specialized “Foreign Liability” and “International Travel” insurance package. It’s designed to protect our organization from lawsuits and incidents that happen on the other side of the world.
How Grantor Insurance Requirements Shape Your Charity’s Coverage Needs
The Grant That Required Us to Double Our Insurance
We were thrilled when our charity was awarded a major grant from a large national foundation. But the grant agreement came with a catch. It required us to increase our General Liability insurance from $1 million to $2 million and to add them as an “additional insured” on our policy. We had to scramble to get the new coverage. It was a clear lesson that often, our insurance limits are not determined by us, but by the contractual requirements of our major funders.
Charity Insurance: Enabling Good Work with Strong Financial Backing
The Practical Power Behind the Passionate Mission
The heart of any charity is its passionate mission to make the world a better place. But passion alone can’t protect an organization from a lawsuit or a fire. A comprehensive insurance program is the practical, powerful financial engine that enables that good work. It provides the stability, security, and peace of mind that allows the organization to focus on its mission, confident that it is shielded from the unexpected events that could otherwise threaten its very existence.