Nonprofits should take risk management more seriously

June 21, 2013

Nonprofits should take risk management more seriously

Media liability, network security and cyber threats are all top concerns for U.S. nonprofits, and having the right insurance policies is imperative if the organization wants to remain protected from the number of risks they face on a daily basis. However, according to new research from insurance brokerage Crystal & Company, managing potential issues that can flare up at nonprofits is not getting the attention it deserves.

The study showed only 22 percent of nonprofits have a full-time risk manager, while 7 percent have never conducted an independent assessment of their corporate risk and insurance program and just 36 percent have taken the time to go over the potential threats they have faced in the past year. Organizations need to do a better job of looking at potential issues that can cause a roadblock in the upcoming weeks, as well as six months to a year down the road. 

"For a nonprofit organization, risk management is paramount because it's crucial that this sector protects its operations, personnel and reputation as complex risks continue to evolve," said John Smith, executive vice president at Crystal & Company.

Nonprofits need better protection
While about 8 in 10 nonprofits that took part in the study have looked at their inherent risks and how their insurance protections can defend them, the research revealed a majority of respondents are spending less than 0.25 percent of annual revenue on corporate insurance. Insurance companies typically believe that number should be in the ballpark of 1 percent. By spending more on coverage, the organization can stay protected from risks that it may not currently anticipate.

"Our research showed that small nonprofit organizations are arranging only the most basic forms of insurance, not necessarily those that will be vital as they grow," said Jamie Crystal, executive vice president at Crystal & Company.

Figure out the right ways to insure the nonprofit
Nonprofits with the necessary insurance and the right policies will have a lot more time to focus on bringing in funds and will be able to worry less about the inherent risks it faces. Here are some tips from the Nonprofit Risk Management Center on how to buy insurance:

  • Complete the application for insurance properly
  • Have an idea of the questions underwriters will ask
  • Explain the work of the nonprofit to the underwriter
  • Don't be afraid to negotiate terms with multiple companies
  • Quickly respond to sent terms for coverage 

Ready to chat?
Get in touch today to request a no-obligation savings evaluation.


CCSCT was approached by First NonProfit to discuss its Unemployment Savings Program and ways the program could significantly reduce the amount of unemployment taxes we were paying. At the time, our agency was paying approximately $80,000 per year. First NonProfit conducted an analysis to determine if making the switch would be in our best interest, and it clearly was based on our circumstances. The first year on the program, CCSCT saw a 70% reduction in its unemployment costs and each year, continues to experience further reductions as a result of having minimal claims. Some additional benefits of the program including having a fixed annual cost, an interest-baring reserve account, professional unemployment claims management and representation at all unemployment hearings. This has been one of the best decisions we have made.

Community Council of South Central Texas, Inc., Seguin, TX

We first started using First Nonprofit’s Unemployment Savings Program when we were a small startup nonprofit.  We didn’t have an HR department and needed expertise in the event that an unemployment claim was made.  We knew we were eligible to be a reimbursing employer, but weren’t sure how to navigate that process.  They made it easy to set things up, plan for, and then manage claims when they came at a very reasonable cost. The amount of time and stress they’ve saved us dealing with all this has been worth way more than the cost.  We’ve now grown to a large nonprofit and do have an HR department but have no plans to stop using their services.  I highly recommend them to every nonprofit I come into contact with!


Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.

Prevent Blindness America, Chicago, IL

Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.

Illinois Network of Charter Schools, Chicago, IL

It has been our sincere pleasure to maintain a strong, vibrant business partnership with First Nonprofit. We greatly admire their strong industry knowledge, technical expertise, constant professionalism, knowledgeable and dedicated staff. They are always extremely responsive, personable and provide us with the necessary guidance and recommendations on a numerous variety of employment scenarios.

Thresholds, Chicago, IL

NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.

New York Council of Nonprofits, Albany, NY

Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.

Visually Impaired Preschool Services, Louisville, KY

Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!

Neurologic Music Therapy Services of Arizona, Phoenix, AZ