Non-Profit Board Members and Your Personal Exposure

Volunteering your time at a non-profit organization is a great way to give back to your community.  In becoming a non-profit board member profit, you can put your skills to use helping others.  You can also benefit personally from the experience you’ll gain.

There is a lot of upside to volunteering for a non-profit board, but there is risk. In many cases, non-profit board members have significant personal assets. Without the right protection, your assets can be exposed.

The Non-Profit Board of Directors

As a board member of a non-profit organization, you help steer the direction of the organization and help make decisions.  The decisions you make and initiatives you lead can impact the organization’s mission.

There can be financial consequences to the decisions you make and actions you take.

Stakeholders of the organization can disagree with your decisions or be financially impacted by them. In the event of a lawsuit, the non-profit may or may not be able to protect you.  This is where insurance plays a role.

Your Personal Insurance

Maybe you have good personal liability insurance, including an Umbrella Liability policy.  Personal Liability comes from your personal auto or homeowners policies and protects you from Bodily Injury or Property Damage to others.   This coverage can extend to protect you from personal injury, such as libel, slander or invasion of privacy.

But it won’t protect you from claims regarding the mismanagement or mishandling of finances in your role as a non-profit board member.  And make no mistake – you can be named personally in a lawsuit involving your role as a director or officer of a non-profit.

Directors & Officers Liability

If you volunteer your time in a board membership role, or if you act as a director or manager in a non-profit organization, Directors & Officers Liability insurance is what will protect you.


Directors & Officers Liability (D&O) is a form of management liability insurance.  In general terms, Management Liability protects you from lawsuits that center around the mismanagement of a company or organization. This could be financial mismanagement, leading to less money being donated to the cause you’re working towards. This could be harassment or discrimination claims, whether from within or outside the organization.

D&O coverage works by both protecting the organization and its individual board and managing members.

Here’s a practical example:

A non-profit organization is sued by someone who has donated a substantial amount of money, alleging that due to mismanagement by the board, not enough of that money is being used to fulfill the organization’s mission.  Whether or not the allegation has merits, there are significant defense costs.

With D&O coverage in place, the insurance will defend both the organization and any individual board members included in the lawsuit.  The exact claim payment structure may vary, but D&O coverage can apply to reimburse the organization for indemnifying you; or, it may indemnify you directly if the organization bylaws does not allow the organization to protect you.

Without D&O coverage in place, the organization may still be able to indemnify you.  This of course would be subject to it being legally allowed to do so and having enough funds.

Without coverage, you may be personally responsible for damages.  And remember that your own personal liability insurance won’t protect you from this.

If You’re a Non-Profit Board Member…

Before you agree to donate your time and expertise, make sure there’s D&O coverage in place.  If you’re currently a board member and there isn’t coverage, seek to get it ASAP.

If the rest of the board doesn’t agree with you, or if it simply is not an option to get this coverage, you can still serve.  If the mission and your contribution to it mean enough to you, you can still serve.  Just know the risk that you’re taking.


Your situation may be unique. We’re here to provide you with advice.  If you’d like to talk about your unique situation or have questions about your exposure, please give us a call.

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