Why Non-Profit Directors & Officers Liability Insurance Is A Must
It is not unusual for people of all ages to become involved with nonprofit organizations. It could be a local organization, regional, statewide or national non-profit. You might be surprised to learn that, according to the IRS, 29 different types of 501(c) non-profits. and it is important to understand that only five are absolutely able to accept tax deductible contributions. These include 501(c)1, 501(c)3, 501(c) 8, 501(c)10, and 501(c)13. To fully grasp the tax-exempt status of nonprofit organizations, you can refer to the IRS Publication 557.
But how about you? Have you ever been invited to become part of a nonprofit? Perhaps, your experience with your favorite nonprofit commenced with your participation as a volunteer. Maybe you were particularly adept as a volunteer and Board of Directors sought you out to become a member of the board. For sure, an invitation to serve on a nonprofit board at first glance is a compliment; however, you should know it comes with heavy responsibilities and jointly and severally considerations.
Consider A Director’s Responsibilities and Risks
It is fortunate in today’s world, the majority of us have access to the internet. This allows us to pose questions and most of our important and incidental inquiries will provide good information for us to make more informed decisions. This holds true if you are invited to join a nonprofit’s Board of Directors. Here is a sampling of search engine results from Googling “what should I know before joining a non-profit board?”
- 501 (c) community – The nonprofit collaboration network
- Huffington Post: “10 Questions to Ask Before Joining a Non-Profit Board”
- The Balance: “How to be on a Nonprofit Board without Regretting it”
- The Bridgespan Group: “What Should I Know Before Joining the Board?”
Reading each of these articles will probably take you about 15-20 minutes, but it will be worth it. You will gain a whole new perspective on the commitment you are being asked to consider.
Does the Organization have Non-Profit Directors and Officers Liability Insurance?
If you took the time to peruse the above referenced articles, then you may have noticed that each author discussed (however briefly) Non-Profit Directors and Officers (D&O) liability insurance. It is all well and good that the nonprofit has a mission statement, a strategic plan, a system of checks and balances, a strong financial standing, etc.; however, it is critical that the organization protects all board member with directors and officers’ liability insurance.
It is important to keep in mind if you are currently serving on a nonprofit board or if you are considering starting a nonprofit organization, you will be part of over 1.5 million tax-exempt U.S. organizations; therefore, you will take on the responsibility for considering all that is required to operate a healthy nonprofit.
At John Bailey Insurance, we are prepared to discuss and prepare the appropriate Directors and Officers’ (D & O) for your greater Knoxville, TN, area nonprofit organization. Let our expert staff educate you on the different types of commercial insurance and help customize a policy to meet your budget and protect the mission and goals of your non-profit.