Nonprofit organizations are run by mission-driven individuals who want to give back to their communities and advance important causes. Senior staff members, as well as board members, contribute a lot to organizations’ day-to-day operations. No matter what degree of involvement they have in certain facets of management, they take on considerable liability risk in the scope of their service.
Board members owe the corporations that they serve a fiduciary responsibility, and the same is true for the directors of not-for-profit corporations. They must put the nonprofit’s interests ahead of their own, even when they are not being compensated for their contributions.
An allegation of mismanagement or negligent performance of duties could subject individuals who serve on a nonprofit’s board or leadership team to personal liability exposure. Directors and officers insurance nonprofit coverage is vital for safeguarding people in the event that someone sues them in their individual capacity or jointly and severally from the organization.
Individuals who serve on the board of a nonprofit or have been asked to do so need to inquire about officer’s and directors’ insurance. Not only does the organization need to have some form of coverage, it must have an adequate amount of coverage that meets the full extent of its officer’s and directors’ liability exposure.