It's your ass[ets] . . .
Many nonprofit organizations don't realize that the governance of the organization and the conduct of its directors and officers can significantly effect the corporate shield / personal liability protection that everyone seems to take for granted. Yes, if your nonprofit is incorporated in California, the volunteer directors and officers have some statutory protection from personal liability. But only if the corporation is operated correctly, follows corporate formalities, adopts appropriate procedures, and only if the directors and officers conduct themselves within the required standards of good faith and prudent decision-making. Otherwise, in the event of a lawsuit, a good plaintiff's attorney may be able to "pierce the corporate veil" - making the personal assets of the directors and officers vulnerable to a damage award. Think a day of "Board training" is too expensive, or a waste of time? Think again.
Even if you have a well-run corporate nonprofit and generally prudent directors and officers, don't confuse the protection provided by the statute with the need for good insurance coverage. In fact, for California public benefit corporations (501c3 organizations), insurance - or a good faith attempt to get insurance - is required as part of the criteria to qualify for the personal liability protection offered by the statute. And, just because the statute may protect directors and officers from a finding of liability, it doesn't cover the attorneys' fees that will be incurred in fighting the lawsuit. But a good insurance policy just might . . . .