Risk & Compliance
Complying with State Guidelines
All “I Have A Dream” Programs must comply with state guidelines around child supervision, including maintaining adult-to-child ratios. A survey of requirements by state can be found here.
Another formality of establishing an IHDF Program is obtaining insurance. It is IHDF policy that all IHDF Programs must obtain adequate insurance to cover the Program’s operation and participants.
Commercial General Liability Policies
A commercial general liability policy is the foundation or basic coverage component for any Program. It protects the Program against third-party bodily injury or property damage claims. This type of policy is not purchased simply to provide remuneration to a third party in the event of a valid claim against the Program. It also provides the Program with coverage for legal defense expenses in most cases.
In some cities, Programs have obtained adequate coverage through their local school board or board of education policies. It’s important to closely evaluate these policies to make sure they provide sufficient coverage . Programs should be careful to obtain general liability coverage that applies to activities held on and off the Program’s premises. If the Program’s office is located on a school’s premises, it is recommended that the school board provide coverage on the school premises either by endorsement to an existing master policy or via a board of education resolution. In these cases, any additional general liability policy the Program purchases would most likely provide coverage on an excess basis, which means the Program’s policy would cover claims in cases where the school board’s policy declines coverage or the claim exceeds school board policy limits. Programs should also make sure that events held off premises are covered automatically without any stipulation that the carrier be notified in advance.
Most commercial general liability policies include an abuse or molestation exclusion, which may state that “this insurance does not apply to bodily injury, property damage, personal injury, or advertising injury arising out of the actual or threatened abuse or molestation by anyone or any person while in the care, custody, or control of any insured.” Since the basic commercial general liability policy does not cover abuse or molestation claims, obtaining coverage for these types of-claims should be considered. The exclusion can sometimes be removed from the policy for an additional premium; but in most cases, coverage must be obtained separately. An abuse or molestation policy can be costly, and the underwriting process is extensive. To qualify for this type of coverage, Programs will most likely have to institute such formal procedures as creating guidelines for volunteers and mentors as to when and where they can meet with the Dreamers and conducting criminal history background checks of mentor applicants. Insurance coverage aside, all Programs should carefully screen and monitor staff and volunteers who will be in unsupervised situations with Dreamers in order to protect them from harm.
It is important to extend coverage to include volunteers as additional insureds because volunteers are an integral part of any Program. By adding volunteers to the general liability policy, the Program will have coverage if there is a claim arising out of a volunteer’s actions. If the Program’s office is located in a school or commercial building, the manager or lessor of the premises should also be named as an additional insured.
Property coverage is often available in conjunction with the commercial general liability coverage as part of a package policy. Property exposures for most IHDF Programs are minimal. However, property should be insured properly. Carefully calculate the value of all property, furniture, fixtures, and equipment in the Program’s office and obtain coverage on an “all-risk” basis with replacement cost and no coinsurance clause.
For Programs that own a vehicle, local market conditions will dictate the availability and cost of insurance. It is imperative to obtain a high liability limit because of the potentially broad exposure confronting a Program such as liability for injuries to passengers in
IHDF-owned and other vehicles involved in an accident. To further protect the Program and participants, the drivers must be carefully screened by checking their driving records. Drivers and passengers must exercise proper safety precautions such as using seat belts at all times.
Hired or Non-Owned Vehicles
Most Programs utilize hired and nonowned vehicles such as rentals or volunteers’ and employees’ cars to transport Dreamers. A “hired vehicle” means any vehicle the Program leases, hires, or borrows, but does not include any vehicle the Program leases, hires, or borrows from any of its employees. A “non-owned vehicle” means any vehicle the Program does not own, lease, hire, or borrow that is used in connection with the Program’s operations such as volunteers’ and employees’ vehicles. It is very important to extend coverage under the commercial general liability policy to include non-owned and hired auto liability. This coverage extension applies to bodily injury and property damage arising out of the use of any nonowned auto and the maintenance or use of a hired auto in the course of the Pro ject’s operations. It does not provide collision insurance for non-owned vehicles. The owner’s insurance should provide this coverage, and the Program should obtain copies of the owner’s insurance to verify that it is valid and provides adequate coverage. When renting vehicles, the Program should purchase the optional collision insurance offered by the rental company or confirm that primary coverage is provided through the renter’s insurance or credit-card company if the vehicle is rented personally rather than commercially.
Directors & Officers Liability Insurance
Directors and officers (D&O) liability insurance provides coverage for claims against the organization that arise from governance and management of the organization rather than bodily injury or property claims. Misappropriation of funds or breach of contract are examples of the types of claims that might be covered. Employment related claims such as discrimination, wrongful termi nation, and sexual harassment may or may not be covered, depend ing on the terms of the policy. A D&O claim can result in substantial legal expenses that are usually covered under the policy. In fact, this is the primary reason for purchasing this type of coverage. Because different D&O policies offer a wide variety of policy features, Programs should consult closely with their insurance provider to determine exactly what coverage is required.
Twenty-four hour accidental death and dismemberment and accidental medical coverages
Twenty-four hour accidental death and dismemberment and accidental medical coverages may also be purchased in conjunction with the general liability insurance described above. These types of policies provide limited coverage in the event of the accidental injury or death of a participant, such as a Dreamer or volunteer, during an IHDF activity. Obtaining these types of coverages also reduces the Program’s overall exposure, which may work to the Program’s advantage in the underwriting process for the general liability policy.
Employers are required by law to carry workers’ compensation insurance that covers claims related to employees’ on-the-job injuries. Workers’ compensation benefits fall into four major categories: medical, disability, rehabilitation, and death. The dollar amounts of the benefits and the statutes in each state vary considerably. Local insurance carriers can assist Programs in determining and satisfying their states’ requirements.
Finding Local Professional Services
Having the assistance of local legal counsel during the formation of a Program is essential, but legal issues affecting an IHDF Program can arise in any number of areas throughout the Program’s operation. Corporate organizational structure, charitable contributions, child welfare issues, confidentiality and access to records, relationships with schools, and accidents are just a few of the areas where legal issues have arisen over the years. To help with these areas, there are several sources that a Program can use to secure legal assistance, usually on a reduced-fee or pro bono basis. Keep in mind that it is best to have legal counsel available on an ongoing basis. It is always better to anticipate problems than it is to try and solve them after they arise. If advance notice cannot be given, consult an attorney as early as possible when a problem is identified.
- Personal networks. Having an attorney on the Board of Directors is a good way to ensure access to legal advice. Networking among friends and supporters will often be the most efficient way to find an attorney willing to provide this help.
- Law firms. Most large and medium-sized law firms donate the time of their lawyers for pro bono activities. One advantage of law firms is that often they have lawyers with experience in diverse areas. One downside is that non paying clients are not always the highest priority.
- Bar associations. Many bar associations have legal referral programs where for a small fee or no fee, a client can get an initial consultation. In addition, bar associations often have pro bono panels and legal assistance programs.
- Law schools. Many law schools have clinics where law students, under the supervision of professors or adjunct faculty, represent clients. There is no guarantee, however, that the local law school will have a clinic in an area of the law that will be helpful to the program.
- Umbrella organizations. Oftentimes, umbrella organizations, such as child welfare groups, will have staff attorneys that can provide legal assistance to clients who share an interest in the umbrella organization’s mission.
- Volunteer clearinghouses. Groups such as New York Cares, D.C . Cares , or other members of the “Cares Network ” match organizations with willing volunteers. vVhile many of the potential volunteers are interested in performing direct service such as tutoring children, some may be interested in helping with organizational activities such as legal assistance.
- Legal aid or legal services. Private and government-backed organizations such as legal aid and legal services may have programs that help nonprofit organizations. In addition to helping the Program, many of the legal issues that confront Dreamers or their families such as public benefits, immigration, or family law could be handled by legal aid or legal services organizations.
- Insurance policies. Liability insurance policies typically provide for legal defense if a covered act takes place. Consult the Program’s insurance agent to see if legal counsel is provided when an incident occurs.
Even if some of these resources cannot provide the needed legal assistance themselves, they will often give additional suggestions or referrals.
Programs should also secure the services of an accounting firm to provide an annual audit of the program’s financial status. An annual audit serves several purposes. It determines whether the Program’s financial records conform to generally accepted accounting standards. The audit provides an external verification that the financial records are correct. It also provides an internal control for the Program to protect against mishandling of funds. If requested, the auditing firm may also prepare the Program’s federal (Form 990 or 990PF), state, and local tax returns.
Programs need an audit to provide an external certification that it is operating with financial integrity. Funders very often require Programs to provide an audited financial statement as a prerequisite to receiving financial support.
An audit can be expensive, but Programs may be able to secure pro bono or reduced fee services using many of the same tactics described earlier for securing local legal counsel. Programs should tap into the personal networks of Sponsors and board members to find connections to an auditing firm. Some accounting firms may donate auditing services. Also, investigate whether there is a local professional association of accountants that may be able to provide a referral to a local accounting agency.