Many charities are opting to change their business models, both for financial reasons and in order to progress. When a charity's business model changes, their exposure to risk does too.
We've highlighed four of the main ways charities are adapting in this economic climate:
Many charities are choosing to keep their individual identities but then collaborate with others to share their IT, payroll, properties or employees, for example. There are three main areas that pose a particular risk in a collaborative arrangement:
- A lack of clarity around who is insured
- A lack of record-keeping
- A lack of information on shared and individual liability.
Mergers are now on the increase and whilst there are clear benefits, there are also some major points to consider when it comes to the associated risks. These include liabilities, property and reputation management.
Ensure your charity is still protected.
Many charities are becoming social enterprises or changing from social enterprises into Community Interest Companies (or CICs). Yet as well as bringing new opportunities, these changes also bring risks.
Bidding for public service contracts is a key way for charities to create sustainable new revenue streams. Yet understanding all of the specific contractual obligations required and any associated insurance claims takes special expertise. Ask your broker about the specific risks involved.
And these are just some of the risks. If a charity sets up new shops or ventures, makes redundancies or hires new staff, it’s likely to change your risk and cover.