VOLUNTEERING FOR A BOARD OF DIRECTORS? MAKE SURE YOU’RE PREPARED
(Sponsored content provided by Frost Bank)
Courtesy of Frost Bank
For successful professionals, serving on the board of directors of a charitable or non-profit organization can be a great way to give back to the community. In doing so, it allows you to use your knowledge and experience to support a meaningful cause at a higher level. And while the rewards can be great, even volunteer board service comes with challenges and risks.
For successful professionals, serving on the board of directors of a charitable or non-profit organization can be a great way to give back to the community. In doing so, it allows you to use your knowledge and experience to support a meaningful cause at a higher level. You may be asked to help improve the organization’s operational execution, fundraising strategies or financial management, positioning the entity to fulfill its benevolent mission for years to come.
Courtesy of Frost Bank
While the rewards of board service can be great, so can the responsibilities. In fact, board members serve as fiduciaries of the organization, which means you could be held personally liable for poor management decisions or other severe missteps. Even though you’re a volunteer, you’re not necessarily immune to a lawsuit, which could be financially devastating if you’re not properly protected. For those reasons, it’s important to fully understand the implications of board service before signing on.
Here are three key steps to mitigate your risks:
- Do your research in advance: However excited you may be about the organization’s mission, take some time to learn about how they carry it out, and ask plenty of questions about what your role will entail. Additionally, investigate any prior legal or regulatory actions against the organization, and contemplate any elevated risks involved, such as serving in a highly litigious field like medicine.
- Know how you’re protected: In Texas, the Charitable Immunity and Liability Act of 1987 offers some legal protections for individuals volunteering on behalf of non-profit organizations. But there are many limitations to the law, and it doesn’t cover fiduciary responsibilities. That’s why you should insist that the non-profit organization provides its own robust protection plan, typically called Directors and Officers (D&O) Insurance or Executive Management Insurance.
- Cover any gaps: Once you understand the organization’s coverage, you can further assess your personal risks and decide whether additional coverage may be necessary. Work with your insurance provider to explore options for personal insurance, which may shield you from legal damages when other insurance falls short.
Lawsuits against volunteers may be rare, but they’re not unheard of. If you’re considering a board of directors position, consult with your attorney and reach out to Frost for sound insurance advice. With the right protection in place, you can serve the cause with confidence and enjoy the reward of helping others. For more information, visit FrostBank.com.
