What Nonprofit Insurance Actually Costs

The median US charity spending $250,000 to $1m a year that buys insurance spends $6,769 a year on it, about 1.4% of its budget. Under $250,000 the median is $3,075; between $1m and $5m it is $21,077. Those are not quotes from a broker’s customer file. They are what 256,539 charities reported to the IRS on their Form 990s, and they come with a finding the broker pages cannot show: what an organization does moves its insurance bill more than its size does.

At the same budget, $250,000 to $1m, the median public safety charity, mostly volunteer fire and rescue organizations, spends $22,700 a year. The median international charity spends $2,669. That is a factor of eight between two organizations that look identical on a budget line.

What the figure measures, and what it leaves out

The number comes from line 23 of the Form 990’s statement of expenses, and the instructions are specific about what belongs there. It is the organization’s own insurance: general liability, directors and officers, professional liability, auto, cyber and similar cover. Two large categories are excluded by rule. Insurance provided as an employee benefit, health, life and disability, is reported with staff costs on other lines. And property or occupancy insurance, the policy on a building, is reported with occupancy costs.

That makes line 23 close to a measure of liability type cover, which is the question most people searching for nonprofit insurance cost are actually asking. It is not total insurance spending, and an organization that owns its building should add its property premium on top.

One more thing to read correctly: a charity reporting nothing on the line has not necessarily gone uninsured. Cover can be bought by a parent organization, a fiscal sponsor, a church or a landlord, or bundled into another line. The medians below are among organizations reporting a figure, and the share reporting one is shown alongside. Counting the organizations that report nothing as zero gives lower medians, $904 under $250,000, $4,130 at $250,000 to $1m and $15,976 at $1m to $5m, which is the measure used in the nonprofit insurance guide. For budgeting, the figure among organizations that buy cover is the one to use.

What charities spend on insurance, by size

Two patterns. The dollar figure rises with size, as you would expect. The share of the budget falls, from 2.36% for the smallest organizations to 0.68% for the largest, because a minimum premium is a minimum premium: a general liability and D&O package costs a small organization a good part of what it costs a mid sized one, and it is a far larger slice of a $150,000 budget.

That is the useful budgeting fact for a new organization. Insurance will be a noticeably bigger share of its spending in the first years than the sector average suggests, and a plan that budgets 0.5% because that is what a large charity spends has underestimated by a factor of four. The business plan template uses the figure for its size band for exactly this reason.

Employees change the bill

Staff bring cover that a volunteer run organization does not need: employment practices liability, often workers’ compensation, and generally a larger exposure across the board. The figures bear that out.

Organizations with employees are far more likely to report any insurance, around nine in ten against six in ten, and when they do they pay roughly half as much again to twice as much as organizations of the same size without staff. The jump at the first hire is real and is worth pricing before the offer letter, not after.

What you do matters more than how big you are

Matching the returns to the IRS activity codes in the Business Master File, which covers 84% of them, shows how much the bill depends on the work. Here is every activity group with at least 300 charities in the $250,000 to $1m band, so size is held roughly constant.

The top two are not close calls. Public safety organizations run vehicles, equipment and people into emergencies, and vehicles are the one exposure that volunteer protection law expressly leaves out. Housing organizations have tenants, and tenants are people on premises the organization is responsible for. Both spend between two and four times the median for their size.

The bottom of the table is the mirror image. A grantmaker or an international charity funding work abroad has few people on its own premises, often no vehicles and sometimes no US staff, and its insurance is mostly the board’s D&O and a general liability policy. Its premium is close to the minimum.

The practical use is in the middle of the table. A youth organization, an animal shelter and a human services agency of the same size all sit around $7,500 at the median, with a 75th percentile near $15,000. If your quote is above the 75th percentile for your activity and size, it is worth asking a second broker why. If it is far below the 25th, ask what is excluded.

D&O on its own: what the broker data says

Directors and officers cover is the policy most often searched for and the one the IRS figure cannot separate, because it sits on line 23 with everything else. The most widely quoted standalone figure comes from Insureon, an online broker, which publishes the median premium paid by nonprofits buying through it: $801 a year for D&O, $67 a month, and $1,508 for D&O bundled with employment practices liability. The same page puts general liability at $500 a year and a business owner’s policy at $981. Those figures were last updated in May 2025 and describe Insureon’s own customers, who skew small, so read them as the floor of the market rather than its middle. Insureon’s figures.

Set against the IRS medians, they tell you something useful. A small organization’s whole liability line, $3,075 at the median under $250,000, is roughly what a D&O policy, a general liability policy and one more line of cover cost at those broker medians. Organizations at that size are mostly buying the basic package, and the variation is in what is added to it.

The direction of travel is upward. The Nonprofits Insurance Alliance surveyed more than 200 brokers in July 2024 and found 79% seeing increases of 25% or more for their nonprofit clients, up from 62% in 2020. The survey. Budget for the renewal to be higher than this year’s premium, not the same.

Volunteers are protected; the organization is not

A common reason given for skipping cover is that volunteers cannot be sued. The federal Volunteer Protection Act does give individual volunteers of a nonprofit a defence against liability for harm caused while acting within the scope of their role, provided they were properly licensed where that matters and the harm was not caused by gross negligence or misconduct. 42 U.S.C. 14503.

Three limits make that a weak substitute for insurance. It expressly leaves out harm caused while driving any vehicle that needs a licence or insurance, which is why vehicle heavy organizations top the table above. It does not protect against the cost of defending a claim, only against liability at the end of one. And it says in terms that it does not affect the liability of the nonprofit organization itself. The organization can still be sued, and it is the organization’s assets a claim reaches. That is what general liability and D&O are for, and the nonprofit insurance guide sets out which policies a new organization needs first and which can wait.

How to budget for it

Three steps, using the tables above.

Start from your activity and size. Find your row in the activity table, or the size table if your activity is not listed, and budget at the median. Use the 75th percentile if you run vehicles, serve children or vulnerable adults, hold events with physical activity, or have tenants or clients on your premises.

Add what line 23 leaves out. If you own or lease a building where the lease requires you to insure it, add the property premium. If you employ staff, health and other benefit insurance is a separate and much larger number, and workers’ compensation is usually required by state law from the first employee.

Assume the renewal goes up. With most brokers reporting increases of a quarter or more on some nonprofit classes, a flat insurance line in year two is optimistic. It is one of the back office costs that first time budgets most often understate, alongside accounting and technology.

Method and limits

The source is the IRS Statistics of Income annual extract of Form 990 returns, processing year 2024: 256,539 501(c)(3) organizations with at least $25,000 of spending. Insurance is Part IX line 23, column A; employees are Part V line 2a. Three returns reporting insurance above their total expenses were excluded as impossible. Activity groups come from matching each return’s employer identification number to the IRS Business Master File, which assigns an NTEE activity code; 215,395 returns, 84.0%, matched.

Four limits. Organizations filing Form 990-EZ or 990-N, most of those under $200,000 of receipts, are not in the extract, so the smallest band describes organizations that file the full return. Line 23 excludes employee benefit and property insurance by rule, so it understates total insurance spending for organizations with staff or buildings. Activity codes are assigned by the IRS and are sometimes broad or out of date. And these are one year’s figures, before the most recent renewals.