Charities and not-for-profits are essential parts of Canada’s social fabric, providing critical services and support where they are needed most.
If you work or volunteer for a charity, you know that good intentions don’t eliminate risk. Lawsuits, natural disasters, cyber attacks and other unexpected events can be costly and disruptive. That’s why managing risks and finding the right insurance are vital.
These activities aren’t just about protection. As the Institute of Risk Management notes in its “Risk Governance for Charities” guide, “Integrating risk management into strategic planning can also result in new and different opportunities being identified.” With the right approach, charities can safeguard – and even strengthen – their mission.
Here are practical insurance and risk management tips for Canadian charities and not-for-profits:
Insurance
1. Getting started: Choosing and comparing
Choosing an agent or broker: First, work with an experienced insurance representative specializing in not-for-profit organizations to get customized coverage at competitive rates.
Multiple quotes: Ask your insurance professional to obtain multiple insurance quotes, if possible, to compare coverage options and pricing. This will help ensure you get the best value for your premium.
2. Building your coverage
Bundle policies: Consider bundling insurance policies, such as liability and property insurance, with the same provider to potentially secure discounts. Ask your broker or agent if you should consider optional coverages. This is especially important for natural catastrophe events, which are becoming more frequent and severe, and may not be covered under standard commercial property policies.
Property insurance: Consider what properties you own that need insurance coverage, and ensure your lenders are satisfied with the insurance that you purchase. If occupying rented space, check under your lease responsibilities and make sure any improvements you make to that rented space are adequately insured.
Board of directors liability insurance: Consider directors’ and officers’ liability insurance to protect your board members from personal liability for decisions made on behalf of the organization.
General liability insurance: Ensure your organization has proper general liability insurance along with volunteer liability coverage to protect volunteers who provide services on your behalf.
Spotlight – Cyber Insurance
Doing good work in the community does not make an organization immune to cyber attacks. Unfortunately, it can mean just the opposite. According to the CyberPeace Institute, cyber criminals see charities as “cyber-poor, target-rich,” meaning they hold valuable data but often lack the resources to invest in robust cyber security. According to Carleton University’s Charity Insights Canada Project, only 19% of Canadian charities report being “very confident” in their data security practices.
Privacy violations can cause organizations irreparable reputational damage and financial consequences, so do everything you can to prove the criminals wrong. Ensure all files containing personally identifiable information, both paper and electronic, are adequately secured, and talk to your broker or agent about cyber insurance.
3. Maintaining your coverage
Insurance review: Periodically review your insurance policies with your insurance professional to ensure they align with your current needs and your organization’s evolving risks. Understand your options to make informed decisions.
Regular updates: Keep your insurance agent or broker informed about any changes in your organization’s activities, assets or structure that may affect your insurance needs. Report any changes to your insurance professional to ensure continuing coverage.
Deductibles: Consider opting for higher deductibles in exchange for lower premiums, but ensure that you have the financial resources to cover these deductibles if a claim arises.
Claims management: Establish a clear procedure for reporting and managing insurance claims promptly to ensure timely resolution. Consider whether small property claims need to be submitted to your insurer, as more claims can equal higher premiums. Have one person in your organization act as the key contact for any claim.
Risk Management
1. Assessing and planning
Risk assessment: Regularly assess your organization’s risks and vulnerabilities to identify potential areas of exposure.
Legal compliance: Stay informed about legal requirements and regulatory changes that may impact your insurance needs, such as changes in employment laws or not-for-profit regulations.
Professional advice: Seek legal and financial advice from professionals (brokers and risk managers) experienced in the not-for-profit sector to ensure that your insurance and risk management strategies are sound and compliant.
2. Minimizing and preventing incidents
Risk management programs: Implement risk management programs and safety measures to reduce the likelihood of accidents and insurance claims. Ensure all employees and volunteers know to whom they must report any potential damage or injury. Promptly noting details of an incident can be important to minimize further loss.
Review contracts: Carefully review and negotiate contracts, including indemnification clauses, to limit your organization’s liability in agreements with vendors, partners and service providers.
Volunteer and employee hiring and training: Implement background checks on all new volunteers and employees. Train staff and volunteers on risk management, safety protocols and emergency procedures to minimize potential liabilities. Develop a standard of care policy for youth, children and vulnerable adults who are under the supervision of volunteers, if you do not have one already.
Loss prevention: Invest in security systems, fire prevention measures and disaster preparedness plans to minimize losses and potential claims.
3. Readiness to respond
Continuity planning/emergency response: Develop a business continuity plan, including emergency response plans, to ensure that your organization can continue its mission in the event of a disruption or disaster.
Financial reserves: Maintain a reserve fund to cover unexpected costs or deductibles, ensuring your organization can weather unexpected financial challenges.
Community engagement: Maintain strong engagement with your community and supporters to build a safety net of goodwill in case of adverse events.
There’s one more critical element to effective risk management: your people. As the guide from the Institute of Risk Management notes: “At the heart of good risk management is people, how they make decisions about risks and how well they engage with the organization’s risk management strategy.”
By embedding risk-aware thinking across your team and implementing these insurance and risk management tips, your organization can better protect its assets, volunteers and beneficiaries – while also managing insurance costs effectively.
And in doing so, you’ll foster a culture where risk awareness strengthens your mission and your ability to serve.
)
)