The Most Common Lawsuits Against Nonprofits, and How to Avoid Them

There are many risk exposures that nonprofit organizations have to deal with, lawsuits being one of them. When a lawsuit occurs, it takes up a considerable amount of momentum out of a nonprofit. It’s a big waste of time and money, making it highly detrimental to you and your employees. There’s contract disputes, employment law claims and personal injury lawsuits that make up the majority of claims, according to NOLO.

What can you do when a lawsuit pops up? Once the suit has occurred, all that you can do is defer to your Commercial Insurance provider and your legal counsel and try to work through it with minimal reputation damage, monetary cost, and business interruption. Now, before the lawsuit occurs, take the time to familiarize yourself with the most common lawsuits against nonprofits and how to avoid them.

Every Agreement Should Be in Writing, and Read Before You Sign

This is the best way to make sure that no one misunderstands each other. Make sure everyone thoroughly reads each agreement before signing it. That way if there’s ever an issue, you can present evidence in court to support yourself. Things that an agreement should have include:

  • A project description
  • A list of deliverables
  • A project schedule with deadlines
  • The fee (and how additional fees can be charged)
  • Warranties of the company’s work
  • A company promise to pay for damages caused to signee
  • Contract duration
  • How the contract is terminated
  • How any disputes are going to be professionally resolved

Have Awareness of Relevant Employee Laws, Also Abide Them

Sexual harassment, wrongful termination, discrimination and wage-and-hour disputes are at the heart of all employee claims, amounting to a significant portion of lawsuits against nonprofits, as well as for-profit businesses. Since nonprofits have been stretched on cash since the beginning of time, it not uncommon to hear of someone not receiving overtime or their vacation being distributed improperly. Laws vary between federal and state; this means it’s your job to be educated on both.

Do The Most to Prevent Injuries From Happening

Also known as “tort” lawsuits, this is one of the lawsuits that your nonprofit will probably face the least. However, ones that do happen are often devastating and destructive by nature. This claim stems from physical damage, property damage, emotional distress and the tarnishing of a reputation. Even if the wrongdoer in this situation didn’t mean any harm, they’ll be financially liable when the claim goes through. Sure it was an accident. But it was also careless, and as business owners, it’s important to know how to properly weigh out your personal risks. Find your likely areas of risk and do what you can to minimize them and limit your exposure to legal woes. All it takes is a good company outline, decisive management and proper administration. And  the final layer of protection you can offer yourself is a commercial insurance program designed for nonprofits.

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we strive to protect the investments of homeowners like you. Our comprehensive policies are customized for you to provide the exact coverage you need. For more information, contact us today at (800) 439-0292.