Cyber Insurance for Charities: Protecting Donor Data & Preventing Breaches

The Growing Threat of Cybercrime in the Charity Sector

Cybercriminals are increasingly targeting charities and not-for-profit organisations. Unlike large corporations, many charities operate with limited IT budgets, outdated security systems, and a lack of dedicated cybersecurity personnel. Hackers see this as an opportunity to exploit vulnerabilities and gain access to sensitive donor data, including financial information.

The rise in cyberattacks across Australia has placed charities in the crosshairs. Phishing scams, ransomware attacks, and data breaches are becoming more sophisticated, leaving organisations struggling to defend themselves. 

Many charities store vast amounts of personal and financial data, making them an attractive target for cybercriminals seeking to commit fraud or identity theft.

The Impact of a Data Breach on Donor Trust

Donors give to charities because they believe in their mission. However, a single cyberattack can shatter that trust. A data breach exposing donor names, addresses, and payment details can lead to fraud, identity theft, and financial losses. Once trust is broken, donors may hesitate to contribute in the future, affecting the organisation’s ability to fund its programs.

Reputational damage is another major consequence. News of a cyber breach spreads quickly, and the media often highlights such incidents, making it difficult for charities to recover. Even with the best intentions, a charity that fails to protect donor data can face long-term consequences, including a decline in donations and legal repercussions.

What is Cyber Liability Insurance?

Cyber liability insurance is designed to protect organisations from financial losses associated with cyber threats. For charities, this type of insurance can cover expenses related to:

• Data breaches – If donor information is compromised, cyber insurance helps cover notification costs, forensic investigations, and public relations efforts to manage reputational damage.
• Hacking incidents – Whether through phishing emails or direct cyberattacks, charities can recover losses from stolen funds, fraudulent transactions, or data destruction.
• Cyber fraud – Criminals often impersonate charities to deceive donors into transferring money to fraudulent accounts. Insurance can help cover legal and recovery costs associated with these scams.

How Cyber Insurance Helps with Legal Costs and Fines

Under Australian law, charities must comply with strict privacy regulations. The Privacy Act 1988 and the Notifiable Data Breaches (NDB) scheme require organisations to report data breaches involving personal information. Failure to comply can result in significant fines and legal action.

At a glance:

• Protects intangible assets and operating systems
• Claims made insurance
• Covers:
  • First party (insured):
    • damage to digital assets
    • non-physical business interruption
    • cyber extortion
    • data protection reputational harm (optional)
    • customer care and reputational expense
  • Third party:
    • privacy, confidentiality and security liability
    • regulation defence, awards and fines
    • multimedia liability.

Common Cyber Threats Facing Australian Charities

Phishing Scams Targeting Donors

Phishing attacks involve cybercriminals sending fraudulent emails that appear to come from a legitimate source. These emails often prompt donors or staff members to provide sensitive information, such as login credentials or banking details. Attackers then use this data to commit fraud or gain access to charity systems.

Ransomware Attacks Locking Charity Databases

Ransomware attacks have surged in recent years, encrypting critical data and demanding payment for its release. Charities that rely on digital records for donor management, grant applications, and operational processes can face major disruptions if their systems are locked by ransomware.

Data Breaches Exposing Donor Credit Card Details

A breach in payment systems can expose donor credit card details, leading to fraudulent transactions and financial losses. Many charities rely on third-party payment processors, and while these platforms have security measures, a weak link in an organisation’s IT security can still lead to data exposure.

Legal & Compliance Considerations for Cybersecurity

Australian Privacy Act 1988 and the NDB Scheme

Under Australian law, charities collecting personal data must comply with the Privacy Act 1988, which sets guidelines on how information is handled, stored, and shared. The Notifiable Data Breaches (NDB) scheme requires charities to notify affected individuals and the Office of the Australian Information Commissioner (OAIC) if a data breach occurs that could result in serious harm.

Penalties for Failing to Protect Donor Data

Non-compliance can lead to significant penalties. If a charity fails to implement adequate cybersecurity measures and experiences a data breach, it may face fines of up to $2.5 million under Australian regulations. Moreover, a failure to notify affected parties can further damage an organisation’s reputation and lead to donor lawsuits.

Case Study: A Charity Hacked for Donor Payment Details

In 2023, a well-known Australian charity fell victim to a cyberattack that compromised thousands of donor records. Hackers gained access to the charity’s database, stealing credit card details and personal information. Within days, donors reported fraudulent transactions, leading to an immediate investigation.

The charity had a cyber insurance policy in place, which covered the cost of forensic investigations, legal fees, and donor notifications. The policy also covered lost income due to the temporary shutdown of fundraising campaigns.

Lessons Learned for Other Charities:

1. Invest in cybersecurity training – Staff members need regular training on how to spot phishing scams and other cyber threats.
2. Implement multi-factor authentication (MFA) – Strengthening login security can prevent unauthorised access to sensitive donor data.
3. Regularly update software and security patches – Outdated systems are a major vulnerability for cyberattacks.
4. Have a response plan – A well-documented cybersecurity response plan helps charities act quickly in the event of a breach.
5. Implement a Disaster Recovery (DRP) and Business Continuity Plan (BCP). Ensure to continually update DRP and BCP post findings from consistent trials. 

DRP primarily focuses on technical recovery of IT systems, while BCP considers all aspects of business operations, including people, processes, and facilities. 

BCP is typically more detailed and technical, concentrating on data backup, system restoration, and hardware redundancy, whereas BCP takes a holistic view, including communication plans, alternate work locations, and supplier contingency strategies. 

How to Choose the Right Cyber Insurance for Your Organisation

What Should Be Included in a Policy?

Not all cyber insurance policies offer the same level of protection. Charities should look for coverage that includes:

• Data breach response – Covers legal fees, notification costs, and PR crisis management.
• Cyber extortion – Provides financial protection against ransomware attacks.
• Business interruption – Helps recover lost income due to system downtime.
• Fraud protection – Covers financial losses from fraudulent transactions and cyber scams.

Trusted Cyber Liability Insurance for Australian Charities

Cyber threats can pose serious risks to not-for-profits and charities. ACS Financial offers specialised cyber liability insurance designed to protect organisations from data breaches, cyberattacks, and financial losses. With extensive experience in the sector and a commitment to providing reliable coverage, ACS Financial ensures charities have the protection they need.

For the best coverage, organisations should work with experts who understand their unique risks and can tailor policies to meet their needs.

Protect Your Charity with ACS Financial

Cyber threats are growing, and Australian charities must take proactive steps to safeguard donor data and maintain trust. A cyber insurance policy from ACS Financial can help protect your organisation from financial and reputational damage.

• Get a quote – Secure your organisation with tailored cyber insurance.
• Make a claim – Need assistance? Our team is ready to help.

Call us on 1800 531 465 to discuss your cybersecurity needs.