Increased Popularity of Online Giving Increases Cyber Risk for Nonprofits

// April 28, 2016
Reading Time: 3 minutes


Fundraising. Fundraising. Fundraising. A critical component to every nonprofit organization’s mission is ensuring both their short and long-term financial stability.

With increasing competition for donor funds and changes in government grant programs, nonprofits are constantly looking for new ways to fund their operations and secure their financial futures. Online and mobile giving is a new and surprisingly untapped source of donor funds, but it does not come without its own unique set of exposures. We now live in a world where cellphones and electronics store our most important data, and our fears have shifted away from losing our checkbooks to losing our smartphone.

There are an estimated 2.3 million nonprofit organizations in the U.S. today, which is astounding considering that figure has grown almost 400 percent since 2000. According to the National Philanthropic Trust, in 2014, Americans gave a total of $358 billion to these organizations, a 7.1 percent increase over the prior year. As Americans have achieved these unprecedented levels of generosity, the million dollar question is why?

The U.S. has experienced a technological boom over the last decade. Charity Navigator states that online giving has risen 13.1 percent year over year. The advancements made in the technology sector have made it easier to do business, but nonprofit groups have, in many cases, been left watching from the sidelines. In recent years, nonprofits have seen a huge surge in both mobile giving and online giving. Smartphone app developers began working with nonprofits in order to open up another avenue for donations. Many organizations solicit donations on their websites or through third-party organizations such as PayPal and crowdfunding websites.

One well-known example of crowdfunding is, where you can give money for causes ranging from supporting your local animal shelter to helping a community member in financial peril. This type of giving has the tendency to go viral over the Internet and involves high numbers of donors giving small monetary donations toward a cause or organization. With the growing popularity of crowdfunding, mobile apps and other types of online giving, nonprofit organizations will need to pay close attention to their privacy and network security risk management plan, as their exposure will only continue to increase.

Our Data & Security+ endorsement was designed to help nonprofits address these concerns. At no additional premium, we include a $50,000 sublimit that contains both Data Breach expense and Identity Theft expense. Data Breach expense includes the cost of notification letters, crisis management services and credit monitoring for those affected. The average cost to notify is roughly $100 to $300 per account, and the majority of states now mandate that a business notify someone whose personal information was compromised. The Identity Theft expense portion provides personal protection for those serving in the capacity of a director or officer.

In the past, nonprofits may not have been aware of or even considered these issues to be threats to their mission. In an increasingly complex technological world, the threat is real, and nonprofit leaders must have a plan in place to respond to these concerns. The margin of error is slim, and the likelihood of rebounding from an uncovered data breach event is even slimmer.

Please contact your Professional Lines underwriter for more information or a quote, or get a web quote today >>

As always, thank you for your support and business.

Contact Chris Deveney
Assistant Vice President, Underwriter, Nonprofit Directors and Officers Product Leader | 888-523-5545 Ext. 2756

chrislavelle-authorWritten by Tom Langston
March 3, 2016