Why do nonprofit organizations need D&O insurance?

D&O insurance covers the nonprofit entity, as well as any past, present and future directors, officers, committee members, trustees, employees and volunteers. (Photo: Shutterstock)

In a recent discussion with a nonprofit organization, the topic of management liability insurance, also known as directors and officers coverage, or D&O insurance, was brought into the conversation. Too often, when asked if the board has this important type of nonprofit insurance, the answer is no. The reason is usually that it’s too expensive.

However, there are certain risks associated with not having D&O insurance that all nonprofits should understand.