Forming a nonprofit organization is an adventure that will reap many rewards. However, just like any business, a nonprofit organization always faces certain risks. During the formation phase, it’s important to understand the various liabilities your new organization could come up against.
Volunteers are a necessity for a nonprofit, but unfortunately, they are also a liability. Depending on the nature of volunteer tasks, volunteers could become injured. They could also steal from your organization.
Your organization’s directors and officers could be sued for a host of allegations, including wrongful acts, discrimination and mismanagement of funds. Your webpage poses the risk of copyright and trademark infringement.
Many nonprofits must regularly host events to get the attention of potential donors. Events pose a liability risk to the nonprofit because attendees could be harmed.
How to Prepare
During the planning phase, discuss these risks and what you can do to minimize them.
- If you’re going to utilize volunteers, consider implementing the use of a waiver to protect against liability in the case of injury.
- Purchase nonprofit general liability insurance to protect your organization against damage and injury.
- Plan for how you will account for and publish funds raised and how they are spent.
- Budget for event insurance when your nonprofit has fundraisers or awareness campaigns.
Protecting your nonprofit is one of the most important steps you can take to ensure a successful future.