Regardless of organisational structure, directors and officers of all nonprofit organizations share certain common responsibilities which, if not properly discharged, may give rise to personal liability.
The primary role of nonprofit directors and officers is to maintain financial stability and provide the necessary resources and environment to accomplish the goals and purposes of the organization. The unique nature of nonprofit organisations presents directors and officers with difficult challenges in performing this role. In today’s litigious society, nonprofit organizations and their board members commonly face lawsuits for an extended list of alleged wrongdoings including :
- Discrimination (age, race, sex, employment, membership)
- Wrongful termination of employees
- Inefficient administration or supervision
- Waste of assets
- Misleading reports or other misrepresentations
- Libel and slander
- Failure to deliver services etc
The premium for D&O liability insurance depends on the limit of liability being purchased, scale of business operations, strength of the balance sheet of the company etc. In general the cost will vary between INR 50,000/- to INR 80,000/- for a limit of liability of INR 7.5 crore for nonprofit organisations.
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