If you’re running a nonprofit business then the chances are you’re trying to do good in the world. All of your efforts, and the efforts of your employees, are pulling in a positive direction. In the eyes of the law, though, this doesn’t mean you don’t have the same responsibilities and liabilities as other businesses. Even if you are a charity, you need to
make sure you are doing the right thing and sticking to legal regulations on trademarks, products, and other legal responsibilities.
If you end up getting sued or fined, it can cost your nonprofit thousands. Many nonprofits operate on a “break-even” policy, meaning they’re not trying to make a profit, just to continue existing and doing good. This means that thousands of dollars can be a crippling blow.
Types of Liability for Nonprofits
What are the types of liability that you need to consider? The truth is, there are so many that getting insured is always your best bet. Some ways in which your nonprofit may still be liable financially include:
- Injury to employees. If someone is injured within your staff then the business might be liable, depending on how and when the injury is sustained.
- Protecting customers’ details. If you have donors or other customers, you need to keep all of their details safe. It might be that the nonprofit is liable if they are revealed to the public without permission.
- Trademarks and online etiquette. There are a lot of ways in which you can breach other business trademarks and this might lead to legal action for which a nonprofit is liable.
- Injuries sustained on business premises. If you have a physical location then you can be liable for injuries or illness, especially if the injury is sustained because it is an unsafe environment. A knowledgeable Las Vegas personal injury lawyer will be able to represent a client in Nevada to take action if the injuries were sustained in a Vegas business.
- “Professional” liability. This can cover things like the nonprofit board of directors making errors or omissions, or not acting in a situation where legally they should.
- Product liability. If you produce and sell any sort of product you need to ensure that it is totally safe, if anyone were to get injured using it, for instance, you could be liable for damages and other forms of compensation.
This is not even a full and comprehensive list. There are a lot of things your nonprofit can be responsible for in the eyes of the law.
Legal Representation and Liability Risk Management
You should ensure that you have the best possible representation for your nonprofit. This should be written into the business plan, and form part of your business expenses. Even if you never really need to use a lawyer, you should consult with them when you make changes and be able to ask questions if you have any issues or concerns. You might just want a sounding board for advice on what you are allowed to do.
There are other ways to mitigate risk. Having clear policies within your business so that regulations are stuck to and you communicate with all staff to let them know what is expected, can help to make sure that you don’t get legal issues that stem from incompetence or an employee not checking what the policies of your nonprofit are.
Knowing what state laws dictate is also vital. Across the US, laws can vary greatly from one state to another, and the rules on public and product liability are no exception.
Conclusion – Simple Steps to Risk Management
You shouldn’t be too worried about the possibility of being liable. Often, directors of nonprofits are not deemed directly liable unless there is a real case of negligence. The best ways to protect yourself include research and legal representation. On top of this, you should get a comprehensive insurance policy. Insurance can cover your nonprofit against many of the issues regarding both product liability and other forms of public liability, such as people taking action against your business due to an injury sustained in your premises or while working for your nonprofit.
Peace of mind comes from comprehensive coverage.
Maria Azadian handles content marketing at Nevada Legal Group. Through her extensive research and commitment to her passion for Human rights, Maria has established herself as a prominent author in personal injury matters in Las Vegas, Nevada.
