I am the volunteer director of development of a separate all-volunteer 501(c)(3) “Friends” of a public library. We provide funds to the library to pay local performers for programming. Do we have any potential liability concerns? Should the volunteers who handle our funds be bonded?
I am a big believer in basic insurance for any nonprofit attempting to carry out a serious and continuous program. It can protect not only the organization, but also the individuals involved with the organization. Normally, a grantor won’t be liable simply because it made a grant to an organization that uses the money for a program that has an accident. But that doesn’t mean the donor or its volunteers won’t be sued and need a defense.
Suppose, however, you give money to the library for a children’s magic show, and you recommend the magician who will be perfect for the performance. Or perhaps you hire the magician directly and make arrangements to produce the show at the library. And then the magician causes a kid to disappear.
You don’t need a very vivid imagination to realize how situations could go wrong and how you could be liable for your own negligence. Insurance can also protect you against insider theft or breach of fiduciary duty so you won’t need separate bonding. Talk with a knowledgeable broker to see what you need. It is usually wise protection.