Nonprofit organizations serve their communities by furthering social causes or providing numerous benefits to the public. Through charitable donations and fundraising, nonprofit organizations are able to raise awareness on important topics and offer valuable resources to community members in need. However, operating a nonprofit organization can come with significant risks. These organizations have to oversee property and liability exposures, including working with volunteers, serving food and drinks, and organizing various community events or fundraisers. That’s why it is crucial to have proper loss control measures in place. This article outlines risks nonprofit organizations deal with on a regular basis and offers helpful strategies to avoid possible claims.
Nonprofit organizations are at risk of various liability concerns. For example, property damage to a third-party caused by a nonprofit or its employees can lead to extensive claims. In addition, injuries to employees, volunteers, or visitors could result in litigation. That’s why it’s important for nonprofits to take the following steps to limit their premises liability:
- The parking lot should have regular inspections and maintenance, to ensure it stays in good condition. Prioritize fixing potholes, cracks, and other hazards to avoid accidents. Maintain snow removal and de-icing protocols throughout the property during winter months.
- Check that all floor surfaces in the building remain clean and dry. All property entrances should have water-resistant rugs to eliminate any accidents that may occur from excess moisture during poor weather conditions (e.g., rain, ice, and snow).
- Properly mark all emergency exits and make sure they are free of obstructions. Inform employees never to block an exit, even temporarily. Post signage that clearly outlines emergency evacuation routes and procedures.
- Implement proper food preparation and serving protocols if the establishment hosts events where food is sold or provided.
A work mistake, alleged negligence, or failure to provide a promised service can be damaging to a nonprofit organization, as they could result in extensive lawsuits or financial losses. To reduce professional liability risks, nonprofit organizations can implement the following procedures:
- Develop and execute an adequate application and hiring process for both paid staff and volunteers.
- Make sure there is a training program for new staff and volunteers. Volunteers should be with an experienced employee until they have fully demonstrated competence in their designated tasks.
- Establish protocols for situations with allegations of child molestation, sexual misconduct, and other forms of harassment against employees.
Directors & Officers Liability
Wrongful act allegations can hold directors and officers (D&Os) personally liable for the actions of a nonprofit organization. Nonprofits should implement the following precautions to limit D&O liability:
- Involve the organization’s board of directors in the screening and selection for CEO and other senior-level positions.
- Implement measures to keep the board informed on the organization’s actions and community involvement.
- Develop policies and procedures for handling possible conflicts of interest between the organization and its board of directors.
- Ensure that all verbal, physical, or sexual harassment allegations are properly handled by the board of directors.
If a nonprofit has its own vehicle(s) for the transportation of employees, or volunteers it may be considered a regulated passenger carrier. The organization must follow all regulations and laws applicable to the designation of the vehicle, or they may be vulnerable to automobile liability risks. To minimize commercial auto exposures, nonprofits should consider the following protocols:
- Make sure all drivers possess acceptable driving records. It’s important to secure motor vehicle records (MVRs) for all drivers and should be updated annually.
- Employees should be properly trained in safe driving measures. Prioritize loading procedures so employees and volunteers know how to load vehicles appropriately.
- Never allow employees or volunteers to use their cellphones while driving.
- Consider utilizing telematics technology within commercial vehicles to identify risky driving behaviors with employees (e.g., speeding and hard braking).
- Enforce an effective vehicle inspection and maintenance program. This can ensure that all commercial vehicles remain in good condition and operate safely.
- Review all commercial vehicle and trailer characteristics (e.g., size and weight) to determine the appropriate Federal Motor Carrier Safety Administration (FMCSA) regulations. Routinely check compliance with FMCSA standards and make adjustments when needed.
It’s important for nonprofit organizations to instruct proper risk management precautions to limit devastating insurance claims and lawsuits. It offers various benefits, such as boost employee and volunteer safety, fewer liability concerns and reduces potential for property damage.
Although this article provides a range of loss control strategies, nonprofit organizations don’t have to embark on the risk management journey alone. Contact us today to talk to one of our experienced insurance professionals to discuss insurance solutions and additional loss control techniques for nonprofit organizations.