What is a Fidelity Bond

A fidelity bond protects organizations from financial loss caused by employees or volunteers engaging in dishonest or fraudulent activities. It acts as a safeguard against crimes such as theft, embezzlement, or forgery, offering coverage if an employee misappropriates funds or assets in their care. 

For nonprofits, businesses, and other organizations that handle cash, valuable assets, or sensitive financial information, fidelity bonds are essential. They protect the firm against the risk of internal fraud, ensuring that if an employee engages in dishonest behavior, the organization won't suffer financially. 

Fidelity bonds are typically purchased as a stand-alone policy or added to a broader insurance package. The coverage amount can vary based on the needs of the organization, and the bond may cover specific employees (such as those handling finances) or extend to all staff members. 

While a fidelity bond is not a substitute for thorough internal controls and oversight, it provides a layer of protection against the financial impact of internal fraudulent activities. With a fidelity bond, organizations maintain trust with donors, investors, and the public while minimizing the risk of financial loss due to fraudulent activities. 

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