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Top 5 Risks for Nonprofits

A nonprofit organization aims to improve the world, in small and large ways, through service, education, and performance. And its volunteers work tirelessly to make it all happen.

But that passion can make it difficult to spot dangers that can easily happen in the field — dangers that hurt volunteers and threaten the nonprofit’s work altogether.

A successful nonprofit organization recognizes the risks involved with its work and prepares for any challenge, legal, financial, or otherwise. To help identify those risks, check out the top five things most likely to jeopardize your nonprofit. It takes some extra effort to manage these concerns, but it’s worth it to keep your organization thriving.

1. Funding Shortages

1. Funding Shortages

This is priority number one for most nonprofits. When you depend largely on donations, keeping the coffers full is no easy task. Without funds, you can’t purchase supplies, advertise or promote, or carry out the majority of your work. Simply put, funding is a nonprofit’s lifeblood.

To keep funding in good shape, keep an eye on:

  • Overhead.
  • Administrative costs.
  • Efficiency of your work or charity.
  • Risk management strategies that prevent accidents, mistakes, and injuries.

To drum up support and donations, consider marketing strategies, special events, and community outreach. And it’s always a good idea to network. You never know when you’ll find a wealthy patron who believes in your cause.

2. Injuries at Special Events

2. Injuries at Special Events

We’re all familiar with charitable special events, though some of us may prefer the five-hour pub crawl to the five-kilometer run. Festivals, concerts, fairs, bake sales, dance-a-thons — practically anything can be turned into a fun event for your nonprofit to raise funds and awareness.

Throwing a special event, however, can expose to your nonprofit to some unique risks. Anytime you draw large crowds, host physical challenges, or serve alcohol to the public, you naturally invite certain dangers, such as guest injury. As the organizer, you may be liable for ensuring a safe atmosphere for attendees and volunteers, and any injuries and associated medical costs that occur could fall on your tab.

Some insurance policies can help pay for medical bills or legal expenses if someone alleges your organization didn’t do enough to compensate for an injury. When planning an event…

  • Be sure to ask your insurance agent about Special Event Insurance, which can protect your organization when it’s sued over injuries, damages, and accidents that happen at the fundraiser.
  • Know that different events might require different insurance policies. For instance, you may need Liquor Liability Insurance if you plan on serving alcohol.
3. Data Breaches

3. Data Breaches

A data breach is any incident that exposes sensitive data, such as Social Security numbers, medical records, and financial information. In a world of increasingly digitized information, this risk is only growing, and everyone needs to be prepared.

Nonprofits have already embraced the power of the Internet and its fundraising capabilities, encouraging online donations and electronic payments. But credit card numbers are often targeted in a data breach. Keeping this information safe and secure is crucial for any nonprofit. If a data breach does occur, the nonprofit may have to pay for credit monitoring costs, security repairs, and more.

If your nonprofit handles credit card information, consider purchasing Cyber Liability Insurance to cover data breach recovery costs.

4. Slips and Falls

4. Slips and Falls

This is a common risk for businesses and nonprofits alike. It might not seem major at first glance, but the risk of visitors slipping and injuring themselves at your office can have a serious impact on your budget. When funds are in constant flux to begin with, you don’t need added expenses like paying for a visitor’s mishap.

If a third party is injured on your premises, you can be liable for the damages, such as medical bills and ambulance expenses. You may even be sued over the incident. That’s why you must ensure your premises are safe for the public. Also, General Liability Insurance can help pay for medical expenses and legal costs associated with third-party bodily injuries.

5. Volunteer Injuries

5. Volunteer Injuries

Volunteer injury is a risk unique to nonprofits. Unlike businesses that are obligated by state law to provide Workers’ Compensation Insurance for their employees, nonprofits and their volunteers exist in a gray area (although if you have employees, you may be required to have Workers’ Comp, too).

If a volunteer is injured while working with your organization, are you liable for some of their medical costs? What responsibilities do you have? A nonprofit that has volunteers should…

  • Ask their insurance agent about policies that can address volunteer injuries.
  • Brush up on state labor laws that govern volunteers.
  • Seek out legal counsel for advice.

In some states or for some events, you may need to purchase a Workers’ Comp Insurance policy of your own. The important thing is to know how to handle a volunteer injury so it doesn’t spiral into an expensive drain on your limited budget.

Protect Your Nonprofit

Ready to protect your nonprofit against these risks? Fill out an online insurance application or contact one of our agents to see which insurance policies fit your nonprofit’s needs. After all, changing the world is bound to have some twists and turns along the way, so it’s best to be prepared.

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Certainty in Uncertain Times - A Nonprofit’s Guide to Risk Management
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