Risk management check-in for food banks and other charities

Insureon staff
Food banks and other charities often face limited resources and high demand for their services. By managing risks, they can insulate their finances and continue to meet their goals.
Food bank volunteers.

Charities rely on employees and volunteers to fulfill their missions, so it’s important for these organizations to protect their human and financial resources at the same time.

Food banks are serving more people with less resources these days. In 2020 and 2021, stimulus checks and the expanded child tax credit reduced child poverty and gave a financial boost to millions of Americans.

Many food pantries managed to keep up with demand and provide hunger relief during the coronavirus pandemic, thanks to emergency food support from the federal government and an increase in private food donations. That support began drying up in 2022, as demand remains high.

While keeping up with supply and demand is a primary focus for food pantries and other nonprofits, they also need to manage risks and minimize potential losses.

Although there isn’t a policy known as “food bank insurance” or “nonprofit insurance,” there are a couple of insurance policies that most nonprofits should carry.

Get small business insurance for food banks

Are your volunteer workers subject to state workers' compensation laws?

Workers' compensation insurance can be expensive for food banks and other charities. While volunteers can be protected under workers' compensation insurance, not all states require that you carry it for your volunteers.

Covering your volunteers, even when not required, can let them know that they don’t have to worry about an accident causing them a debilitating and expensive injury.

There are two common situations that trigger the need for workers’ compensation insurance. Most states require that a food bank provide workers’ compensation coverage under two situations:

  • If volunteers are treated as employees, with scheduled shifts and lunch breaks, you’ll have to provide them with workers’ comp.
  • If your volunteers receive any kind of compensation, such as a stipend of food vouchers, they might also be considered employees as far as workers’ comp requirements are concerned.
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Is your D&O insurance up to date?

You also need to make sure you’re carrying enough director's and officer’s insurance for nonprofits. It’s a type of management liability insurance that covers the legal expenses of your board members and officers, if they’re sued for decisions they make on behalf of your organization.

The most common reason for such a lawsuit is a claim of misappropriated funds, without criminal charges.

Without a D&O policy, your board members would have to pay for their own legal defense in case of a lawsuit. Going without this coverage can make it difficult for nonprofits to secure qualified board members.

Do you carry general liability insurance?

General liability insurance covers common risks such as an injury from someone visiting your property, damage to someone else’s property, and advertising injury. You may need this coverage to rent a commercial property, such as a food distribution site, or to qualify for contracts.

You might be able to combine your general liability with commercial property insurance in a business owner’s policy. A BOP costs less than purchasing each policy separately from an insurance company.

Do you have a special event coming up?

Charities and food banks typically hold fundraisers and other events throughout the year, especially around the holidays. While soup kitchens, food drives, and fundraisers give nonprofits a chance to raise money and pursue their missions, public events also create a public liability and leave charities vulnerable to potential lawsuits.

Carrying special event liability insurance will protect you from paying out of pocket for property damage and bodily injury occurring during your events.

If you’re holding a fundraiser or some other event on someone else’s property, they might expect you to carry the kind of insurance policies that will protect them from any damages.

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Christine Aebischer, Contributing Writer

Christine is a contributing writer who's experienced in a wide range of topics from personal finance and insurance to luxury lifestyles and wellness. She is an accomplished writer, editor, and content marketer with a specialization in service-driven content.

Updated by Mike Mosser, Content Specialist

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