Resources

Not-For-Profit Board Protection


Serving on the board of a not-for-profit organization can be a fulfilling way to give back to the community. Yet, in today’s litigious environment, it can also come with substantial personal risk — and the higher your net worth, the more you have to lose.

Momentous can add coverage for your non profit board activities and protect you and your spouse’s personal assets.


Why is Not-for-Profit Board Liability Protection coverage needed on top of a not-for-profit organization’s existing D&O liability policy?

Not-for-profit organizations typically operate on tight budgets and they often carry only the minimum amount of liability insurance. When the limits on the organizations liability insurance are exhausted, board members are personally liable for the judgment amount in excess of the exhausted coverage - putting personal assets at risk.

Types of litigation covered with Not-for-Profit Board Protection

There are many types of claims brought against not-for-profit board members. A few of the common types of litigation that would be covered include:

  • Poor management practices
  • Discrimination (sex, age, race)
  • Wrongful termination
  • Harassment Misrepresentations
  • Libel and slander
  • Copyright infringement
  • Tax law violations 

Real-life Claim Examples:

The local chapter of a national service organization was named in several articles alleging mismanagement and misappropriation of funds. Subsequent investigations revealed that the chapter’s executive director approved a number of questionable payments — some of which were disclosed but misrepresented, and others of which the board had no knowledge. The board members authorized a public response and temporarily suspended certain powers of the executive director, who subsequently resigned. The executive director later filed claims for defamation, wrongful termination and discrimination, seeking damages in excess of the chapter’s $1 million policy.

The board of a residential cooperative building was sued by an applicant who was denied approval to purchase a unit. The applicant claimed the board discriminated against him based on his sexual orientation. The applicant later added a defamation count to the lawsuit.

(Source: Private Client Group, a Division of AIU Holdings)