As the owner of a nonprofit organization or social services business, you have a lot on your plate. From recruiting board members and volunteers to organizing events and fundraisers, your daily operations require your full focus. And when it comes to helping out your community, you plan for everything. So to keep your business at full steam, you probably naturally take precautions to reduce your level of risk exposure.
However, all the interactions and decisions your nonprofit makes on a daily basis open up risk possibilities at every turn. From the scrutiny your board of directors may experience to potentially precarious work situations for your employees, accidents and financial losses are events you should carefully plan for in order to keep your organization thriving.
For protection from events outside your control, business insurance and effective scenario planning can be the difference between your nonprofit’s survival or financial ruin. Read on to discover three risk management tips that can help your organization continue its mission, even when uncertainty strikes.
Risk Management Tips for Nonprofits and Social Services
Sometimes, all it takes is one accident, mishap, or miscommunication to entangle your nonprofit or social services business in a colossal lawsuit. For example, if someone alleges your directors are misusing funds, your business could be sued. If a child is injured at your daycare, the parents could sue for medical expenses. An attendee at your fundraising ball could have too much to drink, get in a car accident, and launch a liquor liability lawsuit against you.
Business insurance is just one of the many tools nonprofits and social services use to manage risk. Though insurance can’t prevent an accident from happening, it can transfer the financial impact of an unfortunate result to an insurance provider. In addition to business insurance protection, here are three ways you can combat the risk of lawsuits and liability exposures your nonprofit may face.
1: Research Your Operations
1. Research your company’s operations to determine your insurance needs.
Successful risk management begins with in-depth scenario planning, which may be more involved than you think. In fact, many nonprofits may not realize the extent of their risk exposures or that there are business insurance policies for most of their needs. To start, you might consider the number of employees and volunteers you have, as the number will affect your Workers’ Compensation policy. Additionally, you’ll want to know your state’s requirements that could affect your coverage needs.
While you’re thinking about your employees, address the need for Directors & Officers Insurance for your board of directors. If you don’t already have this policy in place, your nonprofit could struggle to attract and retain top talent for your organization. That’s because this coverage protects them if your nonprofit is sued for misuse of funds or errors your directors may have made while managing the company. Without the policy in force, your directors could be financially responsible for the subsequent settlement or judgment — and not many people are want to take on a position with that kind of liability exposure.
General Liability Insurance and Property Insurance can protect your nonprofit from third-party liability suits and loss of your business property due to a natural disaster or theft. Errors & Omissions Insurance covers your business when someone alleges you were professionally negligent in performing your services. And this is just skimming the tip of the iceberg. With the proper planning and risk assessment, you can adequately prepare for financial losses you may face while you continue to grow your nonprofit organization.
2: Organize Your Records
2. Keep organized records for all aspects of the business.
If your nonprofit ever does come under fire or public scrutiny, your thorough record keeping and organization of finances and operations can be a vital component to your business’s survival. This attention to detail and organization of funds can help clear up any discrepancies that are raised. Plus, your precautions will help you determine the level of insurance coverage that is appropriate for your business protection needs.
Board members might also delegate tasks to help keep operations running smoothly and in an organized fashion. For example, one person might be in charge of signing checks, depositing checks, opening mail, controlling cash, and authorizing members to activate business transactions. This way, all bookkeeping can be carefully monitored and won’t be scattered among different staff members.
3: Protect Your Employees
3. Protect your employees.
Depending on the services your nonprofit or social services organization offers, your employees may be exposed to a variety of risks. For example, the staff at your animal shelter could easily be bitten by scared animals, which could mean serious wounds and regular hospital trips. Employees setting up for a fundraiser could throw out their backs while lifting and carrying tables and sound equipment. Even in the insulated world of office work, your employees could develop repetitive motion injuries they must endure the rest of their lives.
To protect your employees, be sure to make safety training a regular part of operations. From first aid instruction to proper lifting techniques and use of protective gear, these sessions could save your employees from costly and painful accidents or injuries. In the event that an unfortunate mishap arises, Workers’ Compensation can cover the cost of immediate medical attention and foregone income while your team member recovers.
Business Protection for Your Nonprofit or Social Services Firm
Even with careful planning and preparation, your nonprofit could still be hit with a costly liability lawsuit or suffer property loss or damage. When unforeseen events happen, a comprehensive business insurance policy can act your safety net. If you need help assessing your coverage needs, be sure to talk to one insureon’s nonprofit business-insurance experts. We’ll help you determine the risks you are most likely to encounter and the policies that give you extra security in times of upheaval.