There is a misconception that nonprofits may not require Directors and Officers insurance. If a nonprofit does require D&O coverage, then it must be a large organization. The reality is that all non-profits can benefit from D&O coverage. Here is why D&O insurance for nonprofits is critical.
Nonprofits Have Less Experience
The board directors in nonprofits do not tend to have as much experience as their counterparts in for-profit companies. The directors may not be as accustomed to the general responsibilities of running a company. This means that they may not know good governing practices or decision-making. This makes them more open to lawsuits. When it comes to lawsuits, over half are against nonprofit organizations.
Nonprofits May Have Fewer Resources
Lawsuits are common against the upper management in nonprofit organizations. Unlike for-profit companies, your organization may not have the resources necessary to fight a lawsuit. Even if you believe in your companys innocence, lawsuits cost money to fight. Then, if you lose, you have to pay the settlement.
D&O insurance protects your nonprofit. When you have adequate insurance, you can focus on the needs of your company and your organizations mission. Most nonprofits are passionate organizations that want to help their communities. Insurance makes it possible for your business to continue running.