What happens if a board member invests the non-profit's assets unwisely and loses everything? A creditor might sue the non-profit as well as its directors and officers. Non-profit organizations are not immune to lawsuits. It’s possible someone may disagree with the way you run the organization and file suit. Oftentimes, non-profits don't have deep pockets to fight these types of lawsuits, therefore putting the organization at risk.

Directors and officers liability insurance protects your directors, officers, trustees, employees, volunteers, and the entity from any act or alleged act, error, omission, misstatement, misleading statement, or breach of duty.