For years directors and officers of nonprofit organizations enjoyed a sense of invulnerability because their services were generally not an attractive target for litigation. However, this is no longer the case.
The number of cases and claims is increasing, even for nonprofits. And with increased public scrutiny, directors and officers are becoming larger targets. Over 90% of claims against boards of directors involve some type of employment dispute. Employment claims against directors and officers of nonprofit corporations typically fall into three distinct categories: wrongful termination (including retaliation), harassment and discrimination.
Officers and directors of nonprofit boards have fiduciary responsibilities just as officers and directors of for-profit companies do. It falls into three main categories:
Duty of obedience: acting outside the scope of corporate powers. The governing board of the organization must comply with state and federal law and conform to the organization’s charter, articles of incorporation and bylaws.
Duty of loyalty: Directors and officer must not allow personal interests to prevail over the interests of the organization.
Duty of care: Directors and officers must be diligent and prudent in managing the organization’s affairs.
Any breach in these duties could result in claims that general liability insurance won’t cover. What’s more, nearly every state has volunteer protection laws for those serving nonprofit organizations. However, this generally does not apply to the directors and officers of nonprofit organizations.
Above all, you want to protect your organization and your mission. Becoming embroiled in lawsuits strains an organization, stresses employees, and takes away from the mission of being a nonprofit.
At PLRisk Advisors, we have the experience, knowledge, markets to secure the policies your clients require. We can help secure Directors and Officers insurance (D&O) to protect them and their companies in the event there is an allegation that they have failed to perform their duties.
To learn more about our D&O policy features, review our eligibility, highlights, and target exposures for each type of entity. For more detailed information, please contact us today (855) 403-5982.
