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Nonprofit Risk Management

Posted by: on July 19, 2018 in employee relations Health & Safety Human Resources Uncategorized


Nonprofits are threatened by risks that their workers, volunteers, and organization face on a day to day basis. Nonprofit risk management is a crucial topic that seems to be overlooked by most organizations. These risks include employer liability, liability for special events, cyberattacks.

  1. 1. Employers Liability

    Accidents occur daily, and one simple fall can be detrimental to an organizations funding. For instance, a visitor slips and falls on the nonprofits premises, that nonprofit is potentially liable for the individual’s medical expenses. Also, the individual may also go to the extent of suing the organization. This one fall in theory could take a nonprofit out of existence due to their limited funding. However, organizations can alleviate this danger by financing in liability insurance. General liability insurance policies aid in covering legal fees and medical charges with third-party injuries. Employers may also be responsible for workers compensation for their volunteers at times. Therefore, nonprofit organizations need to speak with their liability insurance about volunteers since they tend to fall into a gray area. For-profit organizations are required to offer workers’ compensation insurance but, nonprofits need to research their state laws to determine if they are required to provide workers compensation or not. The topic of determining if nonprofits are responsible for workers compensation is complicated. It depends on the state laws, the roles that volunteer plays, and how long the relationship is between the volunteer and the organization. If the relationship is longer term it is suggested that the organization may need this coverage because the volunteer is like an unpaid employee. However, most states will not require nonprofits to have workers’ compensation for employees. Under California law, a nonprofit can opt into workers’ compensation coverage with respect to their volunteers. But absent such an affirmative election, volunteers for nonprofit organizations generally are excluded from the definition of “employee” and therefore are not covered by the workers’ compensation and insurance laws (Labor Code § 3352(i)).

  2. Liability for Special Events

    Special events are crucial for generating potential donors however, they can pose a variety of risks which general liability insurance does not cover. This is because special events due to the fact they usually take place outside the nonprofits property. Nonprofit organizations are responsible for providing an all-around safe environment for their guests when they host these events. As a result, they are encouraged to speak with their insurers about special event insurance. Also, if the organization plans to sell alcohol at the event that is another risk that the nonprofit is exposing. Thus, the organization should also discuss liquor liability insurance with their insurer. Just one accident could cause the reputation of a nonprofit organization to be eroded for good.


  3. Cyberattacks

    Nonprofit organization are especially vulnerable for cyberattacks. Many organizations hold private data that is a target for cyber criminals. Countless nonprofits receive donations from investors through their websites, which means they hold credit card numbers and other financial information that a criminal could access. This is a lucrative target for cyber criminals. One cyberattack could potentially bankrupt an organization and if it doesn’t wipe them out financially, their reputation will be destroyed. Cyber liability insurance is a solution that can help reduce the costs linked with a cyberattack and restore the organization’s public status.

With the advancement of HR Outsourcing technologies, even nonprofit organizations can easily handle risk management and ensure they are staying in compliance with all regulations, no matter where employees, volunteers, or visitors are located, allowing them access to the benefits of opening up their organization to a more flexible work environment.

Emplicity understands that HR Outsourcing should be simple and meaningful. As a Professional Employer Organization (PEO), we strive to be a great partner in supporting your business. If you would like to request more information on how we can assist your needs, please reach out to us at 877-476-2339. We are located in California – Orange County, Los Angeles, and the greater Sacramento and San Francisco area.

NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of their clients.