Nonprofit Questions & Answers - Risk Management

If D&O insurance premiums are out of reach, your board may find some protection via riders to home owner insurance policies.

• Have board members contact their insurance company to ask about riders covering volunteer service
• If a board member is able to purchase a rider, they can be reimbursed for the expense. They must be able to provide documentation indicating the exact cost of the rider.

The organization can provide the best protection for board members by acting responsibly in creating adequate policies and controls and taking them seriously.

D&O insurance is one option that many nonprofits know about. The Nonprofit Genie has a description of D&O insurance with helpful answers to common questions. But the cost of D&O insurance is sometimes prohibitive, and even if you are able to carry such coverage, there are other steps you should consider:

• If you have employees, good personnel policies that are followed are an absolute necessity
• Designate a staff/board person who is/will become knowledgeable about employment law
• Consider volunteer insurance
• Have clear policies that explain expectations of volunteer/staff conduct
• If you conduct fundraising events, be sure the venue is insured, either by the owner or yourselves. Be aware of additional liability issues related to serving alcohol.
• If your organization is liable for employment taxes, have adequate fiscal controls to insure the board knows they are being paid.

• Are you having trouble finding affordable insurance?
• Are you having trouble finding a company willing to insure your organization?

These experiences are becoming more common as the insurance industry is going through a period of financial stress. Fortunately, there is now an option for Oregon and Washington nonprofits! The Alliance of Nonprofits for Insurance (ANI-RRG), a nonprofit insurance company based in California, was created to provide stability in the insurance market for nonprofits.

For more information and to obtain the names of brokers in Oregon who can help you access their services: visit ANI-RRG

The most basic coverage should include:

• General liability insurance
• Bonding insurance
• Auto insurance if cars are used in the work of the organization

Other types of insurance to consider are:

• Directors & Officers Insurance
• Errors & Omissions Insurance
• Volunteer Insurance
• Property Insurance that will also cover agency records

For more information about risk management and insurance check out:

• The Alliance for Nonprofit Management
• Nonprofit Risk Management Center
• Alliance of Nonprofits for Insurance

Also check out a booklet titled Coverage, Claims, and Consequences: An Insurance Handbook for Nonprofits.

Bad news from nonprofits sells papers and helps ratings. As a sector, nonprofit leaders are still more respected than used car sales people, lawyers, or politicians, but we may wonder how much longer or credibility will last. There are steps nonprofits can take to avoid becoming another good organization with a bad reputation (or worse, actual financial losses, resigning board members, and endless legal bills).

Top 6 tips to avoid a bad reputation

1. Invest in strong fiscal systems, trained staff, and quality audits, reviews or alternate independent checking of your practices and reports
2. Have your board appoint knowledgeable board members to an audit committee to choose your audit firm and fully review the audit findings with your auditor.
3. Make knowledgeable fiscal oversight a nonnegotiable expectation of your top executive officer. Make sure management has time and resources to check out discrepancies and red flags.
4. Make board oversight of financial policies real, with clear consequences for noncompliance
5. Recognize that a fund raising opportunity which sounds too good to be true probably is
6. Provide high level board review of major vendor relationships, especially when executive staff have close relationships with vendor staff or investors.

We have someone coming to our free informational meeting. This person is deaf & has requested a sign language interpreter. Is this something we arrange, & then bill this person for, or are we obligated to provide an interpreter at our expense for all services rendered?

There are a few things to consider in this situation.

What are the legal ramifications?

First thing to consider is the law and compliance with the American Disabilities Act. The Act states that “Places of public accommodation must give persons with disabilities equal opportunity to participate in and to benefit from their services. They cannot provide unequal or separate benefits to persons with disabilities. They must modify their policies and practices when necessary to provide equal access to services and facilities.” … “all public accommodations are required to provide auxiliary aids and services to ensure effective communication.” Auxiliary aids include interpreter services.

In addition, the law states, “It is not permissible to charge an additional fee or ‘surcharge’ to disabled persons to cover the costs of auxiliary aids or barrier removal.”

Now, you may not fit under the category of “Places of public accommodation.” This would be the case if you “lease or hold your meetings in hotels, convention centers, stadiums, and any other places of public gathering.” And if you do hold meetings in these places, the landlord may be responsible, or perhaps a shared fee contract could be drawn up.

There is a clause in the law that allows organizations to claim undue financial burden and be exempt from providing the auxiliary aid: “…unless the public accommodation can demonstrate that taking those steps [of providing auxiliary aids and services] would fundamentally alter the nature of the goods, services, facilities, privileges, advantages, or accommodations being offered or would result in an undue burden, i.e., significant difficulty or expense.

You can review the American Disabilities Act III Technical Assistance Manual here.

How much will this really cost?

Depending on the day/time(s) of the meeting, you’ll pay between $60 and $75 per hour per interpreter for the service. Legal interpretation is more expensive and if your meeting is longer than 1 ½ hours, you are required to have 2 interpreters. Prices differ depending on the types of auxiliary services you use, as interpreters are not the only option. You might want to consider how often you think this will really come up.

What is your organizational philosophy?

Many nonprofits could easily claim undue financial burden, especially if you have not included these kinds of costs in your budget. However, you may want to review your mission and/or philosophy statements to see if NOT providing these services would go against what you believe is fair and just. For example, if your organizational philosophy statement includes nondiscrimination wording, would you feel that you are being discriminatory if you denied the ASL service?