Fidelity Bond – Will Your Post Need One?

First, what is a fidelity bond?

There are several types of “bonds”, this article is about the fidelity bond every post should have. Many people think of a fidelity bond as crime insurance that protects your post against financial loss caused by dishonest officers.  Starting July 1^st, 2022, the Department will no longer be providing this coverage for a variety of reasons.  Your Post is currently covered until that date under the previous bylaws.  This is because the payment was required before the new Department Bylaws went into effect.

Why will you need a fidelity bond? 

Because of changes to the Department of California bylaws.  Prior to the June 2021 Department Convention, the Department Bylaws said this about a post obtaining a bond.

2020 Department Bylaws, ARTICLE 5 – ORGANIZATION POSTS

Article V, Section 16. Each post shall pay annually to the Department of California, the bill for the bond of its Officers and such per capita tax levied by the Department Convention, plus the per capita tax levied by the National Organization. Posts will pay such per capita tax in full within thirty (30) days of receipt of payment of annual dues received from a post member.

The fee each post was paying annually for their fidelity bond was $10. Once received, the department handled the process of bonding our posts.  At the 2021 Department Convention, a number of changes to the Bylaws were approved.  Among the changes was the section pertaining to posts being bonded. Which now reads:

2021 Department Bylaws, ARTICLE 5 – POSTS

Article V, Section 9. The Post Finance Officer and any officers and/or positions charged by the Post Bylaws with the responsibility of handling Post funds should be bonded under a blanket bond.

The new Bylaws wording “should be bonded”, in essence, makes having a fidelity bond for your post an option. Not many post leaders are aware of this change in the department bylaws and how it requires posts to purchase a fidelity bond on their own. This may be a good topic to discuss with your Post Executive Committee.

Post with smaller monetary assets will need less while those with more, will need more coverage.  How much coverage the Post wants should be decided by the Post membership at the recommendation of the Executive Committee.  You should check your Post bylaws for expenditures.

Will your post need a fidelity bond?  The answer is: most likely.

How do I get my Post Bonded?

One good place to start would be your Post insurance agent. If your agent doesn’t carry fidelity bonding, they might know a reliable company that does, though there are companies that carry both, they might be able to get a better deal bundling a fidelity bond in with your other coverage.  It doesn’t hurt to ask. 

If you do not have liability insurance or an agent, there are many resources available from an online search on “how to obtain fidelity bond for non-profit organizations”.  You might want to consider talking to at least three or more companies to compare rates and services.  Asking them about their claim filing process could prove to be valuable.  Researching each company for complaints (including the Better Business Bureau at www.bbb.org) could save you some problems in the future should you need their services. In any case, starting to research what you’ll need and how to get it sooner as opposed to later will help you to protect your Post better when the time comes to switch over to your own bonding. Once you select a company, you will have to have it voted on by the Post membership.

Please know that your Post is currently covered for up to $10,000.00 by the Department until June 30, 2022.  After that, your Post will need to secure its own bonding to protect its monetary assets.

Mark
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Mark L. Rice
Constitution and Bylaws Commission Chairman, DOC