Disaster preparedness planning important for nonprofits

October 15, 2013

Disaster preparedness planning important for nonprofits

Disasters can strike anywhere, anytime and any business model. Just as for-profit organizations need disaster plans, so do nonprofits.Since most threats to nonprofits are the same as those that affect businesses, it is important they consider similar types of disaster coverage.

Nonprofit insurance options
Insurance companies that specialize in working with nonprofits can help establish appropriate coverage for successful risk management in the event of a disaster or accident. Risks can be weather-related, such as flood or hurricane damage, or associated with legal liabilities from automobile accidents. When reviewing possible insurance options, organizations should be aware of how much they can afford to lose due to a single disaster and insure accordingly. Consultation and planning ahead can ensure that nonprofits are prepared for the financial windfalls of unpredictable accidents and disasters.

Keeping things going
Especially for struggling nonprofits, which may have little or no reserves, it's important to know what activities are critical to keeping the doors open. If a nonprofit has building damage due to a weather incident, it should determine if any employees can work from home.

Many employees may be more than willing and able to complete a large portion of their responsibilities while telecommuting. This can help maintain basic operations while physical cleanup is underway. Before a disaster strikes, determine what tasks employees can complete without coming into the office and discuss how they would fit into a disaster-recovery plan for the organization. When disaster does strike, employees should be able to continue working again the next day.

What will it cost?
According to the U.S. Small Business Administration, organizations should also have some idea of what a disaster will cost outside of property damage.

"Calculate the cost of business interruptions for one week, one month and six months," Carol Chastan wrote on the SBA's blog. "Once you've done that, you'll be able investigate insurance options or build a cash reserve that will allow your company to function during the post-disaster recovery phase."

While the cost of business interruptions to for-profits will revolve more around the loss of sales and revenue, nonprofits should also consider that fundraising efforts and the availability of volunteers could change following a disaster. These types of losses are harder to forecast than those associated with for-profit business models, but even a rough estimate is better than no idea at all.

Content presented by First Nonprofit Companies, the leading provider of state unemployment insurance solutions for 501(c)(3) nonprofit employers.

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