Well-intentioned people often have certain misconceptions about nonprofits. These same people may work or volunteer for a nonprofit agency and hold responsible positions. However, their lack of knowledge or understanding may jeopardize the organization's success. Due to these assumptions, the organization may not take the appropriate steps to protect itself and its stakeholders from harm. Dispelling the myths described below is a first step in managing a nonprofit's risks.
Insurance is a method for financing or funding certain losses.
For most nonprofits, insurance is a critical component of their risk management program. However, insurance is only a financial bandaid. Nonprofits exist for a variety of reasons and with many different missions. However, their first goal is to do no harm and in some way enhance another's life. Enhancements include introducing disadvantaged youth to the beauty of the arts, improving the environment, providing management assistance to other nonprofits, or finding shelter for a battered woman.