While risk bonds are popular in many industries as a tool for protecting clients and stakeholders, they are also useful for nonprofits, especially labor unions. Bonds often provide for the financial solution to a breach of trust caused by someone acting on behalf of your organization, whether they are officers and directors or employees. Some bonds for labor organizations even cover the actions of volunteers when filling appointed positions like workplace steward. Since labor unions engage in bargaining that directly impacts the financial future of members, protection against bad faith actions by union representatives or employees is incredibly important.
Why Bonds Instead of Insurance?
Insurance is a very useful risk management tool, and for many areas of risk it is also the most cost effective. Bonds are designed for situations where a standard insurance policy could not provide the right amount of protection in a cost effective way. Often, it is protection against dishonesty and theft by insiders that winds up being the most useful bond type for an industry, but that depends on the company’s structure and nature of the work. For example, construction bonds cover many kinds of risk that other industries would use insurance for. When it comes to protecting members against the potential dishonesty of union employees and leadership, bonds for labor organizations are the cost effective, long-term choice.