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The Top Four Challenges Nonprofits Will Face in 2023

May 31, 2023
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As nonprofits face an increasing amount of need by those they serve, they can also look forward to a host of potential pitfalls on the back end.

Nonprofits should keep an eye open to several trends that could impact operations by boosting their exposure to risk.

Potential Property Pitfalls

The supply chain issues that impacted so many during the pandemic have not fully subsided, so it will take longer to get materials needed for construction. Though more barges are coming in from other countries, big box stores get their orders fulfilled first, making it harder for smaller organizations to compete.

Once those buildings are complete, nonprofits are seeing an increase in problems resulting from lack of proper maintenance. For example, pipes freeze in the winter, causing water damage. This is among the top five losses claimed by nonprofits.

Also in the top five is severe weather. As climate change increases events such as heavy rain, flooding and tornadoes, facilities face a greater risk for related damage.

Sexual Abuse and the Court System

Nonprofits will have a harder time this year getting insurance coverage for sexual abuse and molestation accusations.

Claims of abuse have risen in recent years and one sexual abuse claim can top $1 million. With such lawsuits climbing, more insurance companies are decreasing limits or dropping this type of coverage.

To avoid a claim, create controls and practice awareness. To lessen the possibility of abuse, nonprofits must be vigilant.

  • Establish policies designed to protect children, teens and developmentally disabled individuals from harm.
  • Carefully select paid and volunteer staff.
  • Properly train and supervise staff and monitor compliance with the organization’s policies.
  • Report suspected abuse to the proper authorities.

Crime and Lawsuits on the Rise

Several types of crime are on the rise as cybercriminals become more sophisticated and employees become desperate. Nonprofits are no exception.

Cybercriminals are targeting for-profit businesses and nonprofits alike with personal phone calls and emails, pretending to be someone else to hack into an organization’s account to steal money or information.

A rising number of employees are embezzling money. This becomes more prevalent when the economy is down because it can lead to layoffs, furloughs and salary cuts.

More and more employees are filing lawsuits against an organization when they feel they are wrongly terminated. This can cause employment coverage to increase.

Auto Coverage

Now that the pandemic is behind us and people are back to normal work habits, employees are driving for work tasks again. For example, an employee or volunteer for a nonprofit is delivering meals or providing in-home service using their own car. They accidentally run a red light and cause a multiple-car crash in the intersection. If the damage exceeds their personal insurance limits, you could be held liable.

This sort of exposure is rising in our new working environment.

Protect Yourself

Here are a few tips to help minimize your risk.

  • Order in bulk to avoid delays in receiving materials.
  • Do background checks and run motor vehicle reports on potential employees to make sure they don’t have criminal records or adverse driving records.
  • Provide consistent training to employees and volunteers to help them recognize and avoid cyberattacks.

To learn more about the potential risks you face in 2023, view our Spring State of the Market report.

Taylor Oswald can assess your risk and determine the right coverage for your nonprofit organization.


For more information, please contact me directly.

Christopher Owens
P&C Risk Advisor
Taylor Oswald
Email

 

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.