Lots of FCA-affiliated organizations have questions about liability insurance. Do we need it? What if we get sued? Shouldn't every nonprofit have insurance?
The short answer to the last one is, “no,” but the reasons aren’t always straightforward. Let’s talk about:
- What liability and risk actually are and how to assess them
- The different types of insurance
- Weighing the cost of insurance against the actual risk
Bear this in mind as you read: Anyone can sue anyone, at any time, for any reason. Whether you have insurance or not. Whether you did anything wrong or not. However, the huge majority of threats are empty and will go nowhere. That funeral director who claims his price list is copyrighted and he’ll sue you if you republish it? Baloney. Sure, he can sue, but publishing public information for education and commentary violates no law.
During 12 years as the executive director of FCA I’ve been the subject of dozens of these silly threats. A simple, “We’ve done nothing wrong and have broken no laws. Filing suit against a nonprofit with $3,000 in total assets and run by community volunteers won’t look good for you when we publicize this,” usually quiets those temper tantrums. The very few suits FCA people have faced will be discussed below.
Liability protection from incorporation
By incorporating your organization you remove most of the personal liability from your board members. That means that if John Q. Public sues your FCA because he slipped on your steps, you as a board member won’t personally be expected to cough up money from your own household funds. Only the organization’s assets can be targeted. And when your small FCA has only a few-thousand dollars in assets you’re not a very attractive target. The worst that can happen, generally, is that you lose your few-thousand dollars. This discourages most suits, and you can also turn it to your advantage when fundraising. You’ll be the David against the funeral Goliath.
So it’s important to adjust your expectations and sense of risk. In my experience, most people are far more afraid of lawsuit threats than they need to be. They silence themselves when they don’t need to because they fear legal consequences that are highly unlikely. Don’t let bullying distort your fear threshold so that you’re dancing to someone else’s tune and letting them spend your money wastefully.
The legal self-help organization NOLO says this:
Fear of personal liability stops many people from joining boards of directors at all -- although the number who have actually been sued is quite small. The news is good for nonprofits, though with certain exceptions. Once your organization is incorporated, its directors or trustees, officers, employees, and members usually won't be on the hook personally for the nonprofit's debts or liabilities. That includes unpaid organizational debts and unsatisfied court judgments against the nonprofit.
Types of insurance: General Liability and Directors and Officers
Broadly, there are two types of insurance that organizations might have: General Liability (GL)and Directors and Officers (D&O; sometimes called Errors and Omissions). General liability insurance usually covers such things as personal injury claims—if you have an office and someone slips on your steps, for example. Some GL policies also let you bond your treasurer or key employees, giving the organization’s money protection if someone embezzles or misuses funds. If you have a physical office and paid employees you may indeed want to consider a GL policy, but this does not describe the vast majority of FCA groups.
D&O insurance covers other scenarios, such as a suit against your board for mismanaging investment funds, failing to file crucial legal paperwork, and others.
Remember, these policies pay the costs to defend the organization and to protect its assets, not the individual board members. Except in rare cases, board members’ personal household assets are not at risk in these lawsuits. It’s a mistake to believe that you’re buying “protection for Jane Doe so she’ll feel comfortable serving on the board.” You are not, since the fact of your incorporation already shields Jane’s money from legal claims.
Note! Insurance policies vary widely by company. Some of the components you’d expect to find in a GL policy might be found in a D&O policy, or vice-versa. It is imperative to research, read policies closely, and have someone familiar with insurance look over the policy before you commit.
To recap so far: Buying insurance does not “protect” the individual incomes and assets of your board members because those are not in danger in the first place. Even if your organization is sued. Insurance helps pay the cost of legal defense for the organization and its assets. Keep this in the front of your mind when you look at the cost of buying a policy versus how much (or how little) organizational money you have to lose.
The federation of FCA groups has been around for 51 years. In that time, there are only two lawsuits I am aware of. None of these are likely at all to happen to your FCA (but remember, anyone can sue anytime) and they’re definitely not an argument for buying liability insurance “just in case.”
- Thomas Lynch v FCA, Funeral Ethics Organization, and Funeral Consumers Alliance of Idaho. Back in 2008, the celebrity funeral director and bestselling author sued these organizations for libel. He also sued FEO’s executive director, Lisa Carlson, personally.* Lynch claimed that we had all defamed him by criticizing his business practices. It was a suit fueled by ego, not facts. The court agreed and tossed the suit out as none of the organizations had said anything untrue and what we did say was constitutionally protected. Read about the suit here (scroll to the bottom of the page).
But it made the small FCA of Idaho justifiably nervous (they got dragged in for reprinting one of the offending articles) as they had no insurance or the money for a lawyer. In the end a lawyer sympathetic to FCA of Idaho did some pro bono work in conjunction with FCA national’s lawyer that got the small group dismissed from the suit. This was exceptional on our defense lawyer’s part; it was a favor and there is no umbrella coverage from national that protects local affiliates.
- A disgruntled funeral director sued the FCA of Central New York in small claims court. That’s the level at which you represent yourself; you don’t need a lawyer. The FCACNY declined to list this funeral director as a cooperating funeral home because of his dodgy business practices. The funeral director believed he had a legal right to be listed as a cooperating funeral home, a claim the judge found as amusing as we did. Two board members showed up in small claims court, told their story, and the suit was immediately dismissed.
Cost versus risk and benefit
How much at risk is your FCA, really? It’s hard to quantify, but it’s pretty small. Many people forget that risk is not an absolute. There are various levels of risk, and each of us has a personal threshold for how much of risk we can tolerate before we buy liability protection. The most common mistake? Overestimating your risk and spending foolishly on premiums against a scenario so unlikely to happen it can’t really justify the cost. In this way, we fall prey to the idea that ANY risk at all, no matter how hypothetical, is unacceptable.
Think about how you buy homeowner’s insurance. Companies want to get the most business from you, so they often “helpfully suggest” you insure your home against all sorts of contingencies. When I bought my house I spent more time declining excessive coverage amounts above and beyond what it would cost to rebuild my modest home if it were to burn down.
Most of us make these choices and don’t buy the platinum package simply because it’s theoretically possible that a fire will destroy our house AND destroy the soil under it AND render the entire neighborhood uninhabitable.
Buying GL or D&O insurance for your FCA because of an inflated sense of risk means, in effect, that you’re buying the platinum package. It’s letting fear waste your scarce resources and member donations.
Let’s use a realistic example. Most D&O policies anywhere in the country start at $1,000 annually, and that baseline is going up. With that in mind, consider the fictional FCA of Coyote Canyon.
- FCACC has $5,000 in total assets in the bank
- Every year FCACC takes in about $2,000 in new member donations and repeat support from members, and it spends about the same amount on newsletters and publications
- FCACC isn’t rich, but it has enough to cover its minimal administrative costs with this modest balance sheet
FCACC decides it needs D&O insurance. So it buys a policy for $1,100 a year. That eats up more than half the organization’s annual income. That’s huge. So huge it’s unjustifiable. Were I a member of FCACC I would be at the next board meeting demanding to know why the board wasted more than half of every donation on an insurance policy instead of the educational mission that I donated for. I think most readers would feel the same about small charities they donate to.
Carry it out five years. FCACC will have spent $5,500 to protect only $5,000 in total assets. It spent more in premiums than the organization ever had in the bank. The absolute worst that could have happened if the group were sued would be the total loss of $5,000. This could easily be made up in fundraising. But in buying the policy they spent more than that theoretical loss. You’d never make such a decision about your own household insurance.
What about FCA national?
First and most important: No, FCA national’s insurance policy does not and cannot cover any FCA affiliate. Each group is a separate, incorporated legal nonprofit. We are affiliated, but we are not legally the same corporation. There are no exceptions or riders that would change this.
FCA national does carry insurance. We spend about $3,600 a year on General Liability, Worker’s Compensation, and Directors and Officers. Why? Because of our size it would be irresponsible not to. We have three paid employees and about $270,000 in assets (this is just more than one year’s worth of operating expenses, not a treasure trove of extra money). We are also a much juicier target as we’re nationally known for being outspoken critics of the funeral industry.
Still, our chances of being sued are fairly low. Even though we were sued for libel, our chances of being sued again are still low. But the potential risk to our assets is great enough that we would be irresponsible not to carry such insurance. And while we’d love to save that $3,600 a year, it’s only 1.5 percent our annual expenditures. Compare that to FCA of Coyote Canyon spending more than half its annual income on insurance.
Questions or comments? Leave us a comment here or write
*Check your homeowner’s insurance policy. Carlson was delighted to discover that her insurance company defended her under its personal injury protection provisions. Remember that “personal injury” doesn’t mean only “I got hurt physically”. It can also apply to “injuries” such as defamation and libel.
Last Updated ( Tuesday, 02 April 2013 22:24 )
-Josh Slocum, executive director
Has your board got one foot in the grave? Do you lurch from meeting to meeting just hoping to get a quorum? Does no one want to be on your board ever, no matter how hard you try?
You’re not alone. The most common request for help we get is from local FCAs with few active board members and no new prospects. I’ve had time to do a lot of thinking and some experimenting over the years, and it seems clear we need to change our approach to filling seats on our boards. But first, we need to start with a fresh perspective about how our FCA runs, the purpose of our boards, and the role of members-at-large.
Step one—back away from the ledge
If your FCA is in crisis mode and you feel like it’s time to shut your doors, step back and make a cup of tea. You cannot recruit effective, enthusiastic people in that state of mind. Prospects can smell the desperation a block away and they’ll run. You may not even be aware that you’re projecting panic but you are. Building a better board takes time and patience. Like planting a crop, you need to be willing to put the time in getting the seeds to germinate and then wait for the harvest. This will not happen overnight and there are no magic checklists to speed it along.
Last Updated ( Tuesday, 02 April 2013 22:24 )
-Josh Slocum, executive director
If we treated feeding ourselves the way most of us approach getting active board members, it would look like this:
Camera dollies in to a man with a panicked expression, clutching the phone. .
John: The cupboard is bare, and I’ve tried everything, but all the grocery stores are closed. . .what will we do!?
Mary (on the other end of the line): Didn’t you ask the kids to stop at the store even once this week before they came over for supper? You knew we were having them over on Sunday like we always do.
John: But none of them wanted to, Mary. I pestered and pestered them; I even left a note scrawled in red paint that said WE’RE ALL GONNA DIE OF STARVATION IF YOU DON’T GET FOOD RIGHT NOW! Nothing works. . .no one’s interested in shopping.
Mary: Can you blame them? You’re making a dinner party sound like a Donner Party. I live there and I don’t even want to come home. You do absolutely no planning, then you leave the kids horror-movie notes and act surprised when they say, “We’re going to McDonald’s.”
Last Updated ( Wednesday, 10 February 2010 21:02 )
Every two years, the local groups affiliated with FCA elect members to the national board of directors. This year, eight candidates are running to fill five seats opening on the national board. These candidates come from FCA-affiliated groups from around the country. They are (click READ MORE below):
Last Updated ( Wednesday, 10 February 2010 20:32 )
1/19/2010 — by Josh Slocum, Executive Director
Lots of Funeral Consumers Alliance groups are consdering scaling back on printed, paper-based newsletters, and moving to electronic versions instead. Money is tight, and since email is free, we're all just wasting money paying for postage, right?
Wrong. We urge any affiliate that's considering dropping a a paper newsletter and replacing it completely with an electronic version not to do so.
Last Updated ( Wednesday, 13 October 2010 11:37 )
FCA Affiliates - looking to reinvigorate your board of directors and build an effective volunteer corps? Check out these tips from Laurie Powsner, Executive Director of the FCA of Princeton and FCA National board member.
Building a Better Board
Have enough people on your board so that all the jobs are getting done and no one person is shouldering too big a load.
- Vice President
- Recording Secretary
- Membership coordinator – receives phone calls and mail, send out materials
- Someone to update and maintain the membership database
- Someone to compile the newsletter
If you have seven board members to do the above jobs, these others can be done by committees formed from the seven. Other jobs include:
- Publicity/public speaking
- Funeral home price survey
- Planning annual meeting
- Funeral board/Legislative monitor
- Distribution of pamphlets (good job if you have someone on your board who is not doing much but doesn’t want to leave the board. Or, use volunteers from your membership).
Raise your standards and you’ll raise the quality of your board. Some affiliate board members feel so desperate that they will take any warm body that offers to be on the board. If you treat it like a task no one would want, you’re not going to attract the kind of people that are going to make an effective board. Shake off the desperation and show new recruits your enthusiasm. Your board deserves highly skilled and participative board members. Remind yourself of FCA’s mission of activism and your local’s potential and move forward with the idea that it’s an honor to be invited to serve on your board.
You can't find the right people if you don't know what you're looking for. While you need the roles filled, look for overall qualities that will help your board work well. You may need someone to be your treasurer, but if you find someone who has that skill but is irritating to be around, not a good choice.
Don’t be scared someone will say no. You might get turned down a lot, but aim high. No one is going to be insulted by being asked.
If you truly think your board is crummy and you’re embarrassed to ask anyone you respect to join, you can say "I even feel guilty asking someone like you to join a board that's as weak and confused as this one. But this organization has a unique role to play as no one else is working to protect funeral consumer’s rights. What's really needed is a total overhaul of the board. I'd like you to work with me and two others of the same mind to work with the new director to recruit six new members and really make this board work. Would you work with me on that committee?”
Look for people who:
- Have the ability to: listen, analyze, think clearly and creatively, work well with people.
- Are willing to: review agenda and supporting materials prior to board meetings; attend board meetings, serve on committees and offer to take on special assignments, ask questions, take responsibility and follow through on assignments, contribute personal and financial resources in a generous way according to circumstances, inform others about the organization.
- Will develop certain skills, such as to: solicit funds, identify and recruit board members, read and understand financial statements, learn about and stay up to date on funeral issues.
- Possess: honesty, tolerance of differing views, a friendly, responsive, and patient approach, community-building skills, concern for your mission, and a sense of humor.
- Are well known and respected community members on your board. They have good connections, are effective at spreading the word about what you do, and they will lend credibility. But, make sure they are willing to do a job as well, even if it’s only a small one. Be clear with new recruits that you have a working board; there are no figurehead positions.
Even if you are thoroughly revamping your board, keep one or two long term board members if you can. While some founding members can be being rigid and controlling, others are invaluable for their institutional knowledge and expertise.
It’s important that each and every person on your board fulfills a role. Look for board members who will complement your current board, not replicate the strengths you already have. Do you have:
- A good writer
- A good public speaker
- Someone familiar with publicity
- A couple of people with a solid financial background
- Someone with fundraising experience and/or the ability to tap into higher-dollar donors
- An attorney (especially helpful are those familiar with end-of life issues or estate planning. Also nice to have for helping with 501(c)(3) status, charities registration, etc.)
- A hospice social worker, nurse or chaplain (everyone on hospice will be planning and purchasing a funeral)
- A physician (especially helpful; a gerontologist, hospice or palliative care physician or one who sits on the local hospital’s ethics committee)
- A reporter (could be your good writer and be helpful with publicity)
- A professor who teaches Death & Dying, Ethics, Marketing, etc.
How to Find Them
- Form a recruiting task force: Sit with your board and make a list of 20 well-connected people of the type you would love to have on your board but who you figure wouldn't do it (but who might know someone who would). Call them and invite them to come to a single meeting. Tell them that you will be telling them about FCA, your mission, services and potential, what you’re looking for in board members and that at the end they'll be asked simply for the name of one person they think would be a good board member. At the meeting, prepare a short presentation of what FCA does and end with the funniest and/or most touching story you can come up with (ask FCA for one if you don’t have one) that will convey your enthusiasm. If you’re lucky, one of them might actually end up agreeing to be on the board (we are very unique). At minimum, you will walk away with the names of a bunch of potential board members. The next day call each one and start by telling them who nominated them.
- Ask each of your current board members to bring the names of three potential board members to your next board meeting. At a minimum, the referring board member needs to be able to articulate why they think the person is a good match. Invite the candidates to a board meeting or have a couple of board members meet privately with them.
- Swinging board members. Pick a few local non-profit organizations, preferably of a similar size (hospice, senior center, community hospital, counseling center, YM/WCA, medical condition related, or even theater, music or other arts group, or environmental group). Call and invite a leader to chat with a couple of your board members and suggest that your two organizations recommend "retiring" board members to each other as a way of establishing organizational links and strengthening ties among communities.
- Make friends with your local hospice. A social worker is an especially good match because of her focus on social justice issues. A hospice physician, nurse or chaplain is also a great choice.
- See if there are home funeral consultants in your area. We share many values and interests.
- Contact a friend or colleague who's affiliated with a local university and see if they can identify professors of public health, management, death and dying, or an administrative dean.
- Consider your membership. Are there people who’ve written thank you notes or stuffed envelopes that might help in other ways? Have you gotten calls from people who shared their own passionate stories of being wronged or those who’ve been appreciative of your help?
- Make an appointment with the head of a local corporate foundation or corporate giving department. Explain your organization’s work and the kind of board members you are seeking. It’s likely that the executive staff of the corporation are already on boards and might like to see their junior members join boards for community goodwill and leadership development.
- Ask your co-workers, friends and family for suggestions.
- Use the online forum at www.funerals.org or the listserv to ask other affiliates where they found their good board members
- See if your community has a board recruitment program through the United Way, a volunteer center, or a technical assistance organization.
Cattle Calls are less effective because they don’t make a link between the need and what the individual can offer. Don't get too excited about a candidate who responds to these as willing bodies do not always make good board members. Serious cultivation and information sharing before inviting this person to serve on your board will produce better results. But, if you must…
- Place ads on bulletin boards, in your newsletter, in the neighborhood newspaper, in the alumni newsletter of a local college, etc. Example: "HELP FCA YOUR TOWN... We're looking for a few talented and conscientious volunteer board members to lead and strengthen our work protecting grieving families from funeral fraud and overspending. If you can contribute your time, thoughtfulness, and leadership one evening a month and are interested in exploring this opportunity, please contact us to find out whether this volunteer opportunity is right for you.
- Post "Great Board Member Wanted" ads on your local community website and on those that match people seeking boards with nonprofits seeking board members such as www.boardnetusa.org or www.volunteermatch.org
How to ask
Most people who have served on a nonprofit board know what they are doing and why they want to do it. However, you may have your eye on someone with no board experience. This is what you want to impart:
- Your skills are needed.
- Our affiliate is going to improve and will benefit from your contributions.
- You have the potential to effect change and have an impact.
- You will feel good by doing good.
- You will enjoy collaborating with interesting people who have the same values.
- You want to learn new skills.
- You enjoy being recognized for your efforts.
- You want to give back to the community.
- It is fun!
Prepare to be on the lookout for board members on a continuing basis
You cannot expect to find the best people if you are rushing to find people before the annual meeting.
Have an application
Include basic contact info plus special skills or expertise (fundraising, finances, PR, databases, legal, newsletters), professional background, education, other professional affiliations, other board service, special interests or hobbies.
Most know little about your affiliate or the work you do. Meeting with one or two board members is good enough for most.
- Why are you interested in our organization?
- Why are you interested in serving on a board?
- Do you have any previous board service, leadership, or volunteer experience? Are you presently serving on any boards?
- What kinds of skills or expertise can you offer? How will the organization benefit from your participation? How do you think we could best take advantage of your expertise?
- What do you expect us to do for you so that your experience is satisfying?
- What kind of time and financial commitment will you be able to make? Are you willing to serve on committees and task forces? Can we expect you to come to board meetings regularly? Would you be able to make a personal contribution?
Consider a contract
It doesn’t have to be scary, but they are taking on formal responsibility for governing this non-profit. It makes it clear you are asking for a serious commitment and you can use it if you need to chop off some deadwood down the line. It can be as general as “I understand that there will be a 2-hour board meeting once a month, committee meetings once a quarter, that I will be asked to participate in planning and attending the annual meeting, etc…”
Disclosure of conflict of interest
While people in the funeral industry cannot serve in a voting capacity, there are others who might have areas of conflict. All board members need to sign this form. FCA can give you one.
Orient new members
Give them enough knowledge about the organization and their role that they can get to work. Ask existing board members what they wished they’d known and what would’ve helped them get up and running faster. Give them:
- The mission, vision and values of the organization
- Some of the organization's history
- A copy of bylaws
- The current budget
- The roles and responsibilities of the board and staff (if any)
- An administrative calendar that shows ongoing major activities of the board
- A list of current and planned committees
- How the board conducts meetings (Robert’s rules of order, Sturgis, etc.)
Put Them to Work
Involve new members as soon as possible in relevant current or new committees. Make room for new ideas and approaches. New recruits who hear “we’ve always done it this way” will give up, leaving you back where you started.
Everyone should make a personally generous gift and raise funds ambitiously. All boards need to have a policy requiring board members to donate to the organization to the best of their means. We can’t we ask others to give generously when we haven’t done so ourselves. The board needs to demonstrate that they believe the organization is worth investing in. With a giving policy in place, prospective board members will know what is expected of them before they join, and before a donor puts them on the spot by asking, “Has all your board given to the organization?”
Ongoing Support and Recognition
Even though you’re a volunteer too and you put in a gazillion hours – don’t forget to thank your board members from time to time.
Training and Development
Continue the training of new board members and keep older ones engaged by occasionally having a guest speaker, a presentation by one of the board members, inviting board members to area seminars and conferences held by other organizations, etc.
— by Len Finegold, board member of the Funeral Consumers Alliance of Greater Philadelphia. Adapted from an article in the FCAGP newsletter.
Last Updated ( Wednesday, 10 February 2010 20:59 )
At a party, someone recently asked me, “Have you done anything out of the ordinary since we last met?” I was about to mutter my usual “nothing much”, and then remembered I’d visited a crematorium. My friend admitted this was unusual and worth hearing. So, I told the story of my penultimate visit to a crematorium—I feel fortunate since most people visit only once
. It came about because the board of the Funeral Consumer Alliance of Greater Philadelphia regularly visits the funeral homes they recommend to members. I had never been on one of these visits, and I volunteered—with some trepidation—for the next one. . .