Navigating risk in a time of heightened scrutiny
By Nelson Kefauver
Nonprofits aren’t immune to risk. In fact, they’re facing a growing wave of legal, financial and reputational threats.
As public attention and donor expectations intensify and regulatory priorities shift, today’s nonprofits operate in an environment where even minor missteps can lead to major consequences. If your organization issues grants, conducts public outreach, or accepts funding from high-profile donors, you’re likely facing growing scrutiny and exposure—and some are not prepared.
Insurance advisors and nonprofit leaders play a key role in navigating this environment. But today’s risks demand more than just standard policies. As pressures mount, the fundamental question becomes: Do nonprofits have adequate insurance coverage in place to manage today’s evolving liabilities?
Emerging liability risks that
nonprofits face today
Lawsuits, investigations, and reputational challenges are no longer limited to large organizations—they’re increasingly affecting nonprofits of every size.
In recent news, federal officials publicly questioned the tax-exempt status of a prominent university. That kind of attention can easily extend to smaller organizations. Today, nonprofits are facing scrutiny from regulators, donors, and local communities alike.
Even well-managed nonprofits can face damaging claims. Common triggers include:
- Grant-making for social or political causes
- Accepting donations from high-profile or controversial sources
- Internal policies on hiring, inclusion, or advocacy
These risks are escalating, and many organizations lack the coverage to withstand them.
Nonprofit insurance gaps: Why many remain underinsured
Despite rising exposures, many nonprofits remain underinsured—or completely uninsured. Some assume that size protects them from legal action, while others rely on outdated policies that no longer reflect today’s operating realities.
Many smaller nonprofits still lack Directors and Officers (D&O) insurance, even though board members can be held personally liable for decisions made on behalf of the organization. The financial impact of these claims can be significant. This poses a serious risk for organizations that rely on volunteer leadership to guide key decisions.
You’ve likely seen clients carrying inadequate management liability policy limits or only purchasing general liability coverage—policies that leave critical gaps. This is where you can add real value: by helping clients uncover blind spots and close coverage gaps before they become costly problems.
Key nonprofit liability exposures
Understanding where nonprofit risks are evolving is key to building the right insurance program. These areas are especially critical:
D&O liability. Board members and executives are increasingly accountable for financial management, oversight, and public communication. Personal liability is a growing concern—even in smaller organizations.
EPL (employment practices liability). The Equal Employment Opportunity Commission (EEOC) received 88,531 discrimination claims in fiscal year 2024, marking a 9% increase over the previous year. Complaints included disability, harassment, retaliation, and pay equity issues.
Nonprofits may also face more scrutiny around internal hiring and inclusion practices. Whether they’re evolving or maintaining their current approach, the risks are real.
Crime and fidelity. Nonprofits that handle donations or grant money are common targets for fraud, impersonation scams, and phishing attempts. Smaller organizations are often seen as easier targets, making crime and fidelity coverage key to a well-rounded insurance plan.
Other coverages. Policies such as employed lawyers and fiduciary liability are increasingly important for nonprofits with in-house counsel or those managing employee benefits. These risks are often overlooked and rarely covered under standard liability policies.
Nonprofits aren’t immune to risk. In fact, they’re facing
a growing wave of legal, financial and reputational threats.
Insurance solutions for hard-to-place nonprofits
As scrutiny grows, some of the nonprofits most exposed to risk also face the greatest barriers to coverage. These include political and advocacy groups, economic development corporations, credentialing bodies, homeowners associations with unusual structures, and others with prior claims or atypical operations.
Many insurers limit their appetite for these organizations. But brokers can still help clients navigate this landscape by identifying carriers that offer tailored nonprofit solutions—and by using the right tools to guide the conversation. These may include:
- Educational resources. Customizable summaries and one-pagers to help explain coverage options to clients.
- Targeted training. Continuing education (CE) sessions focused on financial oversight, evolving risk trends, and policy structure.
- Responsive underwriting support. Quick, collaborative responses on eligibility, exposure specifics, and quoting timelines.
Consider one real-world example: A nonprofit that had received funding from a high-profile donor became the subject of national media scrutiny. Without D&O insurance, its board could have faced personal legal exposure—putting the organization’s future in jeopardy. With the right coverage in place, the nonprofit was able to weather the attention and preserve both its leadership and its mission.
Strengthening nonprofit insurance programs
As pressures on nonprofits grow, this is an opportunity for advisors and nonprofit leaders alike to reevaluate existing insurance programs—not just to meet current requirements, but to support long-term resilience.
Coverage should evolve alongside an organization’s mission. By identifying gaps, aligning protections with today’s liabilities, and working with partners who understand complex risks, leaders can take a more strategic approach to protecting their organizations.
Ultimately, insurance isn’t just about risk transfer. It’s about enabling leadership continuity, preserving trust, and sustaining the impact that nonprofits have on their communities.
The author
Nelson Kefauver, CFA, has been head of Financial Lines for North America at Intact Insurance Specialty Solutions since January 2019. Prior to this role, Nelson worked at Great American Insurance as the chief underwriting officer for Executive Liability from December 1999 to December 2018. Nelson’s career began in the U.S. Army as an Intelligence Specialist from January 1995 to December 1997. Nelson holds a bachelor’s degree in business from Taylor University, earned between 1990 and 1994.
This article is provided for general informational purposes only and does not constitute and is not intended to take the place of legal or risk management advice. Readers should consult their own legal counsel or other representatives for any such advice. Any and all third-party websites or sources referred to herein are for informational purposes only and are not affiliated with or endorsed by Intact Insurance Group USA LLC (“Intact”). Intact hereby disclaims any and all liability arising out of the information contained herein.
