Lawsuits and liability claims have developed a fairly negative reputation, and it’s true that hardly anybody wants to go through the time, trouble of an unnecessary legal process. That being said, lawsuits serve a meaningful purpose. They help to protect the rights of both employees and clients with regard to mistreatment, legal conflicts of interest, and other areas.

Now, even in nonprofits and NGOs, liability issues come up frequently. From 2002 to 2012 nearly two-thirds of nonprofits reported a Directors and Officers Liability claim. Individuals working in or seeking to work on nonprofit boards ought to be aware of the risks and take steps to avoid these kinds of complicated legal situations. The Traveler’s Insurance article ‘6 Considerations Before Joining a Nonprofit Board’ spells out ways potential nonprofit board members can protect their interests and assets from the risk of a lawsuit.

First, it’s important to know what responsibilities come with being a board member, whether fundraising, governance, frequent meetings, etc. Second, potential members should know who else is on the board, and know something about their leadership style and reputation. In particular, the effectiveness of governance should be noted. Third, potential members must know the policies involving employee laws and human resources. This will be important for ensuring good conduct and avoiding a liability claim. Fourth, review bylaws, financial documentation, and quality and reliability of records and other pertinent documents. Checking the company’s transparency will help to ensure accurate facts in the event of a lawsuit. Fifth, investigate whether the organization has ongoing lawsuits or history of lawsuits, internal disagreements, or auditing issues. If it does, you will need to decide whether you want to risk being involved with that organization. Finally, it’s important to ensure that the organization has a Directors and Officers Liability insurance policy, and learn the details about it. In the event of a lawsuit, this policy will become especially pertinent, so you should know its specifics in advance.

Serving the greater good through a nonprofit is positive, but none of us should enter any profession without first weighing the risks and preparing ourselves for them.

‘6 Considerations Before Joining a Nonprofit Board’. Travelers.com. 31 December 2017. Web. https://www.travelers.com/business-insights/industries/nonprofit/6-considerations-before-joining-a-nonprofit-board

Towers and Watson Directors & Officers Liability Survey, 2012.