Small charities often operate on a shoestring budget. With just a handful of dedicated employees, minimal events each year, and the part-time support of a small board, it may seem like a group of friends struggling to make a difference.

What could possibly go wrong?

Yet these are the organizations that need insurance the most. Nearly 1 in 5 Canadian charities has been sued at least once, proving that doing mission-driven work doesn’t protect you by itself. And working with vulnerable populations often requires a specialized approach as well.

Getting started

Unfortunately, it only takes one major issue for an organization to fall apart. Whether it’s the financial fallout from a lawsuit or the reputational harm from a negative news story, nonprofits can’t afford to skip securing insurance protections.

Whether you’re working with the public, running events, or even just collecting data, the risks can be more significant than you imagine.

Protections like these can help:

Directors & Officers (D&O): Board members are the foundation of a charity’s work, so protecting them is critically important. Directors and other leaders who are attacked personally do not continue to contribute.

Cyber: Most nonprofits collect significant data about their donors. Not only does a cyber-attack affect current operations by shutting down certain activities, but a cyber-attack could impact the charity’s ability to fundraise in the future.

Employee Considerations: Even with just a small number of employees, it’s important to treat them right. Offering benefits is a great way to attract and retain employees, and employment liability can protect you from harm when you need to let someone go.

Event Planning: Even a small event often requires protection, whether it’s events insurance or even securing permits. You’ll want coverage for basic slips and falls, as well as an auto policy if you have a vehicle making deliveries.

Best practices for building a program

If your nonprofit has never had an insurance program, building one from scratch can be daunting. Consider these best practices:

1. Build consensus: If you’ve never allocated funds for insurance program before, it will be critically important to get the leadership team, and the board of directors, on board. Share information to demonstrate the importance of insurance protections for your organization.
2. Protect the leaders: When something goes wrong, the leadership team is vulnerable. Secure Directors & Officers (D&O) coverage to protect them from personal attacks that can impact their bank account and their reputation.
3. Consider the organizational risks: With so many perils, start with the riskiest exposures. Whether it’s commercial liability, auto insurance, cyber protection or even a simple policy for basic slips and falls, consider where your nonprofit’s activities leave you most exposed.
4. Consult with your broker: As a former CFRE and fundraising professional and now broker, I would recommend consulting an expert advisor specializing in charities and nonprofits. They can be an invaluable resource, as they understand the risks and can guide you to make the right choices to better protect you and your nonprofit.

Anne Pathammavong is a commercial account executive in the non-for-profit sector at global insurance brokerage Hub International out of the Toronto office. She has over 15 years of experience in the charitable sector, including roles at TVO, the Canadian Cancer Society, and LOFT Community Services. Anne brings deep expertise in nonprofit risk management, focusing on Directors & Officers liability, Errors & Omissions and event-related exposures. Anne is currently pursuing her Chartered Insurance Professional (CIP) designation. Contact Anne, anne.pathammavong@hubinternational.com.