Non-Profit D&O Insurance: Examples of insurance at work

Updated:
March 14, 2019

We at Scrivens are extremely proud of the partnerships we have made with non-profit and social services organizations in Ottawa. Non-profit organizations provide essential social services that benefit the community and their members. These organizations cannot survive without dedicated leaders to make major decisions on behalf of the organization.


However, even when acting in good faith, directors and officers of non-profits expose themselves to risks with each decision they make on behalf of their organization. In the event of a claim, non-profit leaders could suffer severe damage to their reputation and personal finances simply based on their decisions. In order to protect themselves, directors and officers (D&O) insurance for non-profit leaders is crucial and can provide many benefits.

Claims Scenario: Revoking Donations

The entity:

An animal shelter that regularly accepts donations from its members.

The challenge:

The board of directors of an animal shelter was recently sued by a number of their long-time donors. While these members have been involved with the non-profit for years, they felt the shelter was misrepresenting its financial status.

As a result, the donors demanded that they are repaid all the money they gave to the shelter. The shelter faced three separate lawsuits on this charge and defence costs exceeded $530,000.

Non-profit D&O insurance in action:

Non-profits rely heavily on the donations and support of others. And while you may think that donations are simply gifts, they can lead to serious litigation risks in the face of misrepresentation or other alleged wrongdoings.

In the case above, D&O insurance is invaluable, as it helps non-profits recoup the costs of legal expenses. What’s more, many D&O policies provide policyholders with access to legal professionals, who can help simplify the litigation process and ensure that non-profits navigate lawsuit concerns quickly and efficiently. Non-profits and their leaders often don’t have the funds to fight lawsuits on their own and, without the right coverage, could go bankrupt in the face of legal action.

If you would like more information regarding D&O insurance for non-profit organizations, please contact Michael Scrivens at 613-236-9101 or mscrivens@scrivens.ca

FAQs

What is financial advising?

Financial advising involves providing guidance and advice to individuals, families, or businesses to help them make informed decisions about their financial matters. This can include various aspects such as investment planning, retirement planning, tax planning, estate planning, and more. Financial advisors analyze their clients' financial situations, goals, and risk tolerance to create customized strategies that align with their objectives.

Why is financial planning important?

Financial planning is crucial for several reasons:

Goal Achievement: It helps individuals set and achieve financial goals, whether they are short-term, such as buying a home, or long-term, like funding a comfortable retirement.

Risk Management: Financial planning addresses risks by considering insurance, emergency funds, and other protective measures.

Budgeting and Saving: It promotes responsible money management through budgeting and saving, fostering financial stability.

Wealth Building: Effective financial planning can lead to wealth accumulation and the creation of a secure financial future.

Can financial advisors help with debt?

Yes, financial advisors can help with debt management. They can assess your overall financial situation, create a budget, and develop strategies to pay down debt efficiently. They may also negotiate with creditors on your behalf, provide debt consolidation recommendations, and offer guidance on prioritizing and managing debt repayment.

What exactly does a financial advisor do?

The specific responsibilities of a financial advisor can vary, but generally, they:

  1. Conduct a thorough analysis of a client's financial situation, including income, expenses, assets, and liabilities.
  2. Develop personalized financial plans based on the client's goals, risk tolerance, and time horizon.
  3. Provide investment advice and portfolio management services.
  4. Offer guidance on retirement planning, estate planning, tax planning, and insurance.
  5. Monitor and adjust financial plans as needed based on changes in the client's life or market conditions.
  6. Educate clients on financial matters and empower them to make informed decisions.
What is the average fee for a financial advisor?

The fees charged by financial advisors can vary widely based on factors such as the advisor's experience, the services provided, and the region.

Common fee structures include:

Hourly Fees: Advisors charge an hourly rate for their services.
Flat or Fixed Fees: A set fee is charged for specific services or a comprehensive financial plan.
Asset-based Fees: Fees are a percentage of the assets under management (AUM).
Commission-based Fees: Advisors earn commissions on financial products they sell.
Combination of Fees: Advisors may use a combination of the above fee structures.
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It's important to discuss and clarify fee arrangements with a potential financial advisor before engaging in their services.