Insurance is usually something that is taken at the last moment. Many non-profit organisations are too preoccupied with assisting other individuals that considerations such as insurance only arise upon requirement of renewal.
That is understandable. Insurance is not always urgent when you are operating programs, coordinating volunteers, raising funds, organizing events and struggling with every penny. It is kept in the background until a person requests a certificate of currency, a landlord requests documentation or a claim occurs.
The point is that such not-for-profits as they think will be satisfied with a typical business policy. On the face of it, that may be understandable. They might even possess some equipment and some day to day activities, after all, a few staff members and an office. It does not resemble a small business much.
However, as soon as you have a closer look at the reality of the functioning of the majority of charities and community organisations, the difference becomes clear.
There is another type of risk facing Not-for-Profits
Not-for-profits tend to rely on volunteers. They run fundraising events. They interact with the citizens of society under random conditions. Others offer support services, counselling or training or advocacy. Others deal with donated inventory, transportation within the community, food programs or outreach. They also have sensitive information regarding donors, clients or volunteers in most occasions. That combination has an entirely different nature of exposure compared to what a normal business would have, which is operated through a shopfront or office.
And that is where the trouble begins. The policy can seem okay until the time you are required to depend on it.
Volunteers Change the Picture
Volunteer contribution is one of the areas that can be singled out. Volunteers in many organisations are not simply volunteering on an occasional basis. They play an important role in the operations of the organisation. They could be volunteering to work in events, sorting donations, addressing the people, visiting the customers or doing stocks. In the event that one of the volunteers is injured in the course of undertaking such tasks, or that something occurs when they are representing the organisation, the cover must be in line with that fact.
That is quite self-evident which is frequently overlooked.
A conventional business structure tends to form the basis of a standard policy. A specialist not for profit insurance policy is much more apt to take the volunteer activity seriously since it is so common in the sector.
Professional Risk Carried by some Organisations
The same can be said of the kind of services offered by a number of NFPs. There are other organisations that are not merely raising funds and conducting community operations. They are providing counselling, support, education, mentoring or counselling. Such work may pose a professional danger. When a person claims their loss occurred due to the advice they got, or the services delivered to them were not as expected, the case can go beyond mere liability of the people. This is where professional indemnity comes into consideration and that is one of the reasons why generic cover can fail.
Being a Leader is a Real Responsibility
Then there is the side of things which concerns leadership.
Many of these individuals still believe that since an organisation is charitable, the legal pressure is less in some way. It is not. Decisions regarding money, staffing, compliance, governance and risk continue to be made by the board members, committee members and executives. In case of a dispute, allegation of mismanagement, or even an employment related complaint, such people can be brought out. The legal expenses are, even in a claim that is not successful, such a pain.
That is why a management-style protection is important to not-for-profits. It is not concerning anticipating the worst with people. It is of understanding that even in mission-led organisations that have good intentions, there is still responsibility.
The Cyber Risk is no longer a Big Business Issue
Another area where cyber risk has most smaller organisations weak than they perceive is in the area. The not-for-profits generally believe that cyber cover is primarily used by bigger businesses, but this is no longer the case. A community organisation can still contain information on donors, payment details, records of volunteers, internal financial records and personal correspondence. When such information is stolen, locked or even exposed the outcomes can be disorganized and costly.
It is not merely about money, too. In the not-for-profit arena trust is a crucial factor. Once information has been leaked through supporters feeling that what they are not being dealt with in the right manner, it is difficult to restore confidence.
Fundraising Comes with Its Share of Exposure
Fundraising has generated its own risks as well. A charity meal, market booth, community fundraiser or awareness event can seem familiar due to repetitive nature of the organisation in doing this. And in every happening comes moving parts. At the event, people come together, installations are created, money is exchanged, and areas are destroyed and nothing ever works. Someone trips over a cable. Property is damaged. Equipment is stolen. A supplier fails to show up. The minor cases may become an expensive one quite quickly.
Specialist Cover Is About Fit, Not Extra Cost
It is the reason why special insurance is worth considering in the right way. It is not the issue of stuffing a charity with policies that it does not need. It is all about ensuring that the cover is actually reflective of the manner in which the organisation is run in real life.
It is thinking out of the box to many not-for-profits. It involves the consideration of volunteer exposure, event activity, governance risks, cyber issues, property and public liability and professional services as one and not as a matter of afterthoughts.
It is not always the wiser policy to have a cheaper one that has holes at the points where it counts the most.
The not-for-profit is designed to perform work at the end of the day that is important. The insurance is there to save that work derailment by a single incident, a single claim or a single careless lapse of sight that no one quite anticipated. Good cover does not reduce commitment of an organisation to its mission. On the contrary, it helps the mission by ensuring that the organisation is stronger.
ACS Financial offers specialist insurance to Australian not-for-profit organisations, charities and faith-based organisations. Their team assists organisations to cover in an affirmative manner that the organisations actually operate such as public liability, professional indemnity, volunteer, cyber, property and management risks.
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