Man holding an amusingly small umbrella over a drawing of a man, illustrating insurance coverage

Risks and Insurance

Can we be sued?

One of the most common questions I'm asked by volunteers is, "Can I/we be sued for that?" The answer that no one wants to hear is – anyone can sue anyone for anything at anytime undefined and someone will! A standard tactic in many lawsuits is to name all possible individuals and organizations that may possibly be liable. It is up to the defendants to argue to the court why they should not be included in the lawsuit and dismissed from the case. Just getting dismissed can be costly. It cost one of my clients $70,000 to convince the court it should not be a defendant.

Therefore it is important that all nonprofit groups consider the potential risks and take steps to avoid, limit, transfer and protect against such risks.

Common Risks

Based on a quick review of lawsuits involving nonprofit organizations it appears that three of the most common risks for these groups are: torts (injuries to persons); officer and director liability for failure to carry-out their legal and fiduciary duties; and "negligent hiring" of either paid staff or volunteers who are later found not to be qualified or who have backgrounds (i.e. criminal convictions, etc.) that make them greater risks for the positions in which they are placed. Many nonprofit organizations under the mistaken assumption that state and federal laws, referred to as charitable immunity or "good Samaritan" laws and "volunteer protection" statutes, provide adequate protection to individuals who volunteer their time on behalf of nonprofit charitable and educational organizations. While laws exist that provide liability protection in certain circumstances, these laws should not be relied upon to provide adequate protection for nonprofit groups and their volunteers in all, or even most, circumstances.

Charitable Immunity Statutes

Some states have charitable immunity or "good Samaritan" laws that protect certain volunteers in particular circumstances. Many of these laws, however, are limited to providing exemption from liability to people who in good faith render medical care to ill or injured persons. The laws often do not protect volunteers who are engaged in other activities on behalf of a nonprofit group. In addition, as the nonprofit sector of the U.S. economy has grown and matured, these types of charitable immunity statutes are becoming more restrictive and giving way to the theory of respondeat superior – meaning the superior or employer (nonprofit) should control and be liable for the acts of its employees/volunteers. Therefore while charitable immunity may exist is certain situations in certain states, it should not be relied upon.

Volunteer Protection Act

It took nearly ten years of steady lobbying before the federal Volunteer Protection Act of 1997 was enacted. While this law provides some protection to volunteers, it has numerous exceptions and limitations. For example, the Act does not protect volunteers if their acts or omissions result from:

  • Willful or criminal misconduct
  • Gross negligence
  • Reckless misconduct
  • Conscious, flagrant indifference to the rights or safety of the individual harmed by the volunteer.

In addition the Act does not cover:

  • Volunteers when the harm is caused by the operation of a motor vehicle, vessel, aircraft, or other vehicle for which the state requires an operating license or insurance.
  • Any misconduct that constitutes a crime of violence, a hate crime, a sexual offense, or misconduct for which the volunteer is found to have violated a federal or state civil rights law or where the volunteer was under the influence of intoxicating alcohol or any drug at the time of the misconduct.

And finally, States may further limit the applicability of the Act preempting their State from the federal law and enacting a state law which may:

  • Provide additional liability protection for volunteers.
  • Opt volunteers in the state out of coverage under the federal law.
  • Require nonprofit organizations to undertaken certain activities like provide training to volunteers and/or carry insurance in order for the protection act to be effective.

Managing the Risks

Because state and federal laws can not be relied upon alone to protect nonprofit groups and their staff and volunteers from liability, it is recommended that all nonprofits develop a risk management system to manage the risks. A basic risk management system can be developed following three simple steps:

  1. Identify the risks
    • Review the types of risks your organization may be exposed to
    • Review your premises, your location, your staff and supervision, the types of activities you engage in, and the types of risks to which your staff, volunteers, members, and the public are exposed
    • Review the standard of care expected of your organization
    • If you work with children and youth your standard of care may be higher
    • If you work with experienced volunteers or in an area that people expect expertise, your standard of care may be higher
    • If you work with inexperienced volunteers, and the public is aware of the volunteers' lack of experience, your standard of care may be lower
  2. Assess the risks
    • What risks can your organization tolerate?
    • Which risks can you control?
    • Which risks are too great to bear?
  3. Control the risks
    • Avoid risks that are too great to bear
    • Modify policies, plans and procedures to reduce risks
    • Transfer risks to others via informed consent documents (i.e. "hold harmless" agreements and "permission slips" drafted to withstand legal muster), contractual agreements and insurance
    • Accept and prepare for the risks
    • Implement a volunteer management program
      • Develop volunteer position descriptions
      • Use & screen volunteer applications
      • Train & supervise volunteers
    • Review & revise your risk management plan regularly

Development of the plan can be as simple as forming a committee to meet and brainstorm to identify the most probably risks for the organization, assess the risks and provide recommendations to the full board for adopting an action plan. Often the assistance of a professional with knowledge of common risk factors for nonprofits is employed to facilitate the development of a risk management plan. A facilitator can often assist the organization to better identify the most likely risks and should be able to provide suggestions for better controlling the risks, including developing appropriate policies, consent documents and contractual arrangements.

Insurance

Carrying appropriate insurance is one way to control risks. There are four basic types of insurance nonprofit organizations typically carry: general liability – to cover accidents and injuries to individuals; directors and officers – to cover the personal liability of officers and directors for their legal responsibilities serving the organization; property – to cover loss of property/assets of the organization, such as damage to facilities, owned and rented equipment, and property/inventory related to fundraising programs; and, bonding – to cover loss of funds of the organization to embezzlement and the like. While state and federal laws can not be relied upon to provide all necessary risk protection to nonprofits, with appropriate planning and management of the risks nonprofit groups should be able to conduct their programs and have peace of mind.

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Three Questions before any ASK©

Laura Fredricks

Dec 06, 2019

Before you make your best ASK there are three very important questions you need ASK yourself. Think of this exercise as goal setting which many of us do at work and at home. If you never set a goal you never achieve that goal. If you never ASK you never get what you want. 

Setting goals is a must when you need to ASK. Once you set your goals you can filter out all of the unnecessary things that might prevent you from ever making your ASK. For instance, if you keep second guessing why you are asking, instead of what YOU are going to ASK, you never get to the ASK. Setting these goals will keep you focused on what you should be focused on, your ASK. It also makes you more prepared. When you are more prepared you are more confident. When you are more confident your ASK becomes more attractive to the person you want to ASK 

Setting your goals also allows you to set the playing field. In the process of making your ASK, knowing what you need, when you need it, and who you can give it to you prepares you for whatever response you may receive. Setting your goals makes it harder for the person you are ASKing to catch you off guard, change the conversation, or give you a surprise answer. If you go in knowing how to articulate your own needs, you’ll always be in control of exactly what you will say. 

Knowing EXACTLY what you want to say and practicing your ASK words will ease your tension and anxiety that can come up when you ASK. It will help you feel more confident about how the conversation will go because you have prepared the conversation. Anxiety is known as the “fear of the unknown,” and if you’re ever anxious before making a huge pitch, it’s because you’re afraid of how it might go. We can easily do away with those fears if you just take a few minutes to ask yourself and answer the following questions. 

Ask yourself these questions before making any ASK to ensure your success: 

1) What do you want? 

Be specific, and keep it brief. If you are ASKing for money, then you need a specific amount. There is a world of difference between ASKing for “an increase” and ASKing for “$10,000.” When you make any ASK you need to have a crystal clear idea of exactly what you want. This is your first simple goal. Don’t over complicate it. Don’t over explain it to yourself in your head. If you are ASKing someone to do something for you, such as pick you daughter up after school then just ASK “Can you pick up Chrissy today after school at 3:00 pm this would be so helpful to me?”  Most of us overcomplicate the ASK by going into extraneous details about why you can’t do it, how you are overworked, overburdened, and how your schedule is overwhelming. Finding the right balance between specificity and brevity is important. You want to be specific enough that it is a concrete goal, but keep it simple enough so it is attainable and you do not get lost in extra details. 

2) When do you want it? 

Know the specific time or date of your ASK. There is a HUGE difference between “I’d love you to consider this by next week” and “Can I call you next Tuesday at 10 am so that we can go over the details and sign the agreement?”  This is your second simple goal. You should have absolute certainty that your ASK contains the exact time frame that you want your ASK to come to a conclusion. If you don’t I assure you that a week will turn into a month. A month will turn into two or three months and now your ASK is so old the person has forgotten what you ASKed. You might get what you ASKed for, but you might not get it at the time you wanted it. By laying out the specific time frame of when you want it you make time WORK for you not against you. 

3) Who can give it to you? 

This third simple goal is so important and is over looked so many times. This goal requires you to write down in priority order who you have the best chance with ASKing and getting exactly what you want. Sure, many of us make a list or have it in or heads of who we would like to ASK, who we should Ask but are those people the right people to ASK? By right I mean are they the ones who know and trust you the best and have the means and inclination to say yes? So many times we go to the people who we assume are the easy ones such as the ones who won’t be confrontational or the ones who have said yes before. They may be on your list but when you ASK the order in which you ASK is VERY important. If you need money for a start-up project you should go to the person who could give you the largest amount first, who knows and trust you, and has the means to do so. If you ASK this person half-way through your fundraising I guarantee they will give you a lesser amount because they were not ASKed first. You actually do this every day without recognizing that you do. When you are unhappy with a purchase or frustrated with a service what do you do? You ASK to speak to the manager. You don’t waste time speaking to people who work for the manager because they do not have the power to fix it. The manager does. So when you ASK for what appears to be “larger” things, and often they involve money, remember your third goal – ASK people in priority order who can give you exactly what you want.

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