Board Member Indemnity Is Not Enough


Board members of nonprofit organizations cannot take comfort in the promise of indemnity. The risks are just too great.


“What they are forgetting is that it’s a promise by an organization to indemnify its board members, however it’s only as good as its financial resources.”


Beth Goldberg, Zurich


Board members must be aware that their indemnity is not ironclad if the nonprofit organization lacks the financial resources to sustain a long defense. That risk is real. Charitable organizations may not have sufficient unrestricted funds to use for a defense, and for some types of claims, they may be prohibited from using charitable donations entirely. Underwriters will evaluate the risk profile of the nonprofit, with a particular focus on its financials — the source of the organization’s revenues and how they allocates donations.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26