The food bank in Yakima serves several thousand families a month with eight paid staff, hundreds of volunteers, and a nine-member volunteer board. Its insurance was general liability for the warehouse, donated to the organization years ago by a local agent who has since retired.
A new board member, a retired attorney, asked at her first meeting: "What protects us personally if the organization is sued?" The executive director did not know.
What they asked for
An answer to the board member's question.
What the review found
No directors and officers coverage. Nonprofit board members can be sued personally over decisions they make: a grant spent in a way a donor disputes, a staff termination, a contract with a vendor, a merger with another nonprofit, or a claim from a government funder. Washington law gives volunteer directors some protection, but it does not stop a lawsuit from being filed, and it does not pay for defense. The food bank had no directors and officers policy.
No employment practices coverage. The food bank had eight employees and had just let go of a warehouse manager. Employment claims are the most common claim nonprofits face.
Volunteers were not clearly covered. The general liability policy covered the organization, but it was unclear whether volunteers were insureds. A volunteer who injures someone while distributing food, or who is injured while volunteering, needed clearer coverage.
What we put in place
We placed a nonprofit management liability policy that includes D&O, employment practices liability, and fiduciary coverage in one package. It covers the organization, board members, officers, staff, and volunteers. Many carriers offer nonprofit programs at a fraction of what a similar for-profit policy costs.
We moved the general liability to a policy that names volunteers as insureds, added volunteer accident coverage for injuries to volunteers, and added hired and non-owned auto for volunteers who pick up donations in their own vehicles.
We gave the board a one-page summary explaining what the policy covers, which the executive director now includes in new board member orientation.
Why it mattered
The retired attorney stayed on the board, and so did two members who had privately considered stepping down. The following year, a grocery donor disputed how a restricted gift had been used and threatened to sue the board. The D&O carrier's counsel handled the correspondence, the dispute was resolved without a lawsuit, and the board members were not personally exposed.
If you run a nonprofit
- Board members can be sued personally; D&O protects them
- Nonprofit management liability packages combine D&O, EPLI, and fiduciary
- Make sure volunteers are insureds on your general liability
- Cover volunteers who drive with hired and non-owned auto
Get a free policy review and we will give your board a plain answer.