By Rebecca Keister
PBN Staff Writer

Money – in order to potentially save a lot of it in case of unforeseen liability claims, businesses have to spend some to ensure their protection against such matters.

Nonprofits are no exception but, generally speaking, with less money and manpower available, those organizations may open themselves up to more problems if corners are cut or there is an in-house disconnect on risk assessment.

That’s a big mistake, even for small organizations, according to nonprofit experts and insurance brokers.

“[Nonprofits] take in donations and could be liable for any of their activities,” said Stephen Schonning, president of Schonning Insurance Services Inc. in Westerly. “[The risk] depends on the nature of the nonprofit’s operations and profile. I should probably [be serving] more nonprofits.”

Under the Rhode Island Nonprofit Corporation Act, articles of a nonprofit’s corporation serve to protect the personal liability of an organization’s director or its officers and members, except in cases of a breach of duty or loyalty, acts or omissions not in good faith or involving intentional misconduct, or transactions where such a member may receive an inappropriate personal gain.

Though The Rhode Island Foundation does not provide insurance counseling to nonprofits, Jill Pfitzenmayer, vice president of the foundation’s Initiative for Nonprofit Excellence, said she does point people to guidelines for starting a new nonprofit organization.

“Whenever we talk about best practices and governance, that’s typically something that comes up,” she said.

Schonning said an essential part of a nonprofit’s insurance needs is director-and-officers insurance, which provides financial protection for directors and officers serving on nonprofit boards.