Insurance is not glamorous. It is paperwork, premiums, and conversations most nonprofit leaders would rather avoid.
But if you run a nonprofit long enough, you learn a hard truth. The moment you need insurance is the moment it is too late to start thinking about it.
In this episode of the Charity Charge Show, host Stephen Garten sits down with Pamela Davis, Founder and CEO of the Nonprofits Insurance Alliance, a nonprofit insurer that serves roughly 26,000 to 27,000 nonprofits across California and 32 additional states. Pamela shares how a graduate school thesis turned into a 35 year mission, why traditional insurance markets fail nonprofits, and what new and small organizations need to know before a claim ever happens.
Overview
Episode highlights
Pamela Davis is the founder and CEO of the Nonprofits Insurance Alliance, a group of two nonprofit insurers built specifically to serve 501(c)(3)s. One entity insures nonprofits in California and the other insures nonprofits in 32 other states. Together, the organizations serve about 26,000 to 27,000 nonprofits and have grown to roughly $1 billion in assets.
Stephen and Pamela also dig into the practical side of nonprofit coverage, what to buy first, how underwriting works for small budgets, and why advocacy has become a crucial part of keeping the nonprofit sector insurable.
Meet Pamela Davis and the Nonprofits Insurance Alliance
Pamela’s story starts in an unexpected place, graduate school.
While completing her public policy masters work at UC Berkeley, she wrote a thesis for a real world client during a period when nonprofits were struggling to get coverage. Foundations helped fund the research, the paper was published widely, and the California Association of Nonprofits encouraged her to take the idea further.
Her thesis landed on a simple, obvious point that the insurance industry often ignores.
Insurance markets are cyclical. Coverage appetite swings. Pricing changes. Underwriting tightens.
Nonprofits cannot operate that way. Insurance is like electricity. You need it all the time.
So Pamela helped build a solution designed to last through market cycles, an insurance organization built for nonprofits, governed by nonprofits, and focused on the long term interests of the sector.
Why nonprofits should get insurance early
Pamela speaks directly to founders and early stage nonprofit leaders who feel stretched thin and are tempted to delay operational basics.
Her advice is blunt. The groundwork you put in early pays dividends for years.
Many of the worst claims problems come from basics that were skipped early on, unclear governance, lack of training, poor documentation, weak oversight, and leaders blurring the lines between what belongs to the public and what feels personal.
Insurance is one part of that foundation. It is also the piece that tends to get ignored until something goes wrong.
The first policies to consider
Pamela breaks it down in a practical order.
General liability
This is your basic slip and fall coverage. If you hold events, host fundraisers, rent venues, or bring people together in public settings, you have exposure. In many cases, you cannot even rent a space without it.
Directors and officers coverage
Pamela calls it board and executive coverage. For all volunteer organizations with no employees, it can be relatively inexpensive because the biggest driver of cost is often employment practices risk.
Property and contents coverage
Even if you do not own a building, you may still want coverage for basic equipment like computers and hardware that keeps the organization running.
Professional liability for social service work
If you provide services to vulnerable populations, you may need social service professional coverage to protect against professional lapse claims.
Abuse and misconduct coverage
For organizations working with vulnerable populations, this is essential, and Pamela notes it has become more expensive over time.
Auto coverage
If you have vehicles, you need standard auto insurance. Even if you do not, you may still need non owned and hired auto coverage if volunteers or employees drive on behalf of the organization.
Small nonprofits are not the problem, the market is
Stephen pushes back on the phrase “small nonprofit,” and Pamela agrees.
They may be small in budget, but not in impact.
Pamela also points out something most founders never hear. Many insurers avoid smaller nonprofits. That is part of why nonprofits get treated like a hassle.
Her organization intentionally works with smaller nonprofits and with smaller brokers too, the local insurance professionals who were crucial to their early growth.
If you are a startup nonprofit with a $25,000 to $100,000 budget and you are doing real activities in the community, you are not “too small” to have risk. You are just early, and that is exactly when mistakes happen.
How the quote process works
If a nonprofit wants to explore coverage, Pamela describes a straightforward starting point.
Go to the site, click Get a Quote, enter basic information, and the organization connects you with a broker who understands nonprofits.
Pamela makes a point here. The broker represents the nonprofit, not the insurer, and the goal is to ensure the nonprofit is treated with respect, not brushed off.
Advocacy that most people never see
This is where the episode gets interesting.
Pamela has spent years not only building an insurer, but also fighting for the legal and policy conditions that allow nonprofit insurance to exist.
Making nonprofit insurers possible in the first place
When Pamela started, there was not a clear path under federal law for this kind of insurer to be treated as a 501(c)(3). She spent about seven years lobbying Congress so insurers like hers could exist as nonprofits.
Her reasoning is direct. For profit programs come and go, and they often do not act in the nonprofit sector’s best interest when incentives shift.
A nonprofit governed structure keeps mission first, and keeps the sector insurable when the market tightens.
State level work to keep nonprofits insurable
Pamela describes working with multiple states and even insurance commissioners to craft laws that hold nonprofits accountable when they are at fault, but do not punish them for harms they did not cause.
She cites a recent law in Texas that her team helped draft, with the aim of preventing the justice system from making nonprofits uninsurable through unfair liability exposure.
Why they have lasted 35 years
Pamela credits two things.
A singular mission
They are not a commodity provider chasing a quick margin. Their value is stability when the market shifts.
People who bought into the mission
She describes employees who have stayed 25 to 30 years, and she is candid about the challenge of recruiting from a high paying industry into a nonprofit environment. People stay because the work matters, not because it is easy.
Stephen relates this to Charity Charge’s own journey as a public benefit corporation, especially the difference between long term operators and venture backed startups that enter the nonprofit space, then disappear when money runs out.
What is a risk pool, explained simply
Pamela explains their structure in plain terms.
In California, there is a state law that allows nonprofits to pool together and jointly insure, forming what is essentially an insurance like entity built for the sector. Like a traditional insurer, it can buy reinsurance from global carriers, taking a portion of risk and transferring large claims to reinsurers beyond certain limits.
Outside California, their structure is a risk retention group regulated through Vermont.
Behind both is a nonprofit service organization that provides staff and operational support on a cost basis.
In other words, they built a structure designed to keep capacity in the nonprofit sector, not to extract it.
Blue Avocado, straight talk for nonprofits
Pamela closes by explaining Blue Avocado, a free online magazine published to give nonprofits a practical, peer driven voice.
The premise is simple, stop talking down to nonprofits, share real lessons from people doing the work, and make it readable and actionable.
If you run a nonprofit, it is worth bookmarking.
Key takeaways for nonprofit leaders
- Insurance is not optional if you operate in public, run events, serve people, or manage volunteers.
- Start with general liability and board coverage, then add policies based on your activities and populations served.
- Good governance, training, documentation, and oversight prevent claims and reduce damage when something goes wrong.
- The sector needs stable insurance capacity because commercial markets are cyclical and nonprofits cannot afford gaps.
- Institutions last when mission is clear and people are invested for the long haul.
Learn more
Nonprofits Insurance Alliance: insurancefornonprofits.org
Blue Avocado: blueavocado.org
Interview Transcript Q&A
Q1) What is the Nonprofits Insurance Alliance, and how is it structured?
Pamela Davis: The Nonprofits Insurance Alliance is a group of nonprofit insurers that exist specifically to insure 501(c)(3) nonprofits. There are two main insurance entities. One is Nonprofits Insurance Alliance of California, which insures about 12,000 nonprofits in California. The second is a 501(c)(3) nonprofit risk retention group that insures about 13,000 to 14,000 nonprofits across about 32 other states. Together they serve roughly 26,000 to 27,000 nonprofits and have grown to about $1 billion in assets.
Q2) Where did the idea come from, and what inspired you to build this?
Pamela Davis: The idea came out of Pamela’s graduate work. She wrote a thesis in UC Berkeley’s public policy program during a period when nonprofits were struggling to get insurance. The thesis was funded by the California Community Foundation and the Conrad Hilton Foundation, then published widely. While working with the California Association of Nonprofits, she was encouraged to turn the research into an actual solution: a nonprofit focused insurer built for long term consistency when the traditional insurance market inevitably swings.
Q3) Why do nonprofits need their own insurer, instead of relying on traditional carriers?
Pamela Davis: Traditional insurance is cyclical. Carriers change their appetite, pricing, and underwriting standards, and they can exit a segment quickly. Nonprofits cannot operate that way because insurance is not a “nice to have.” It is more like electricity, you need it consistently, every year, not only when the market feels friendly.
Q4) For a brand new nonprofit, why should they get insurance early?
Pamela Davis: The main reason is that you want coverage before something goes wrong. If someone gets injured, it is too late to start thinking about risk and coverage. Insurance also forces a nonprofit to build good operating habits, training, documentation, and oversight. Many claims situations come from organizations that did not understand the law, skipped training, lacked oversight, or did not document properly. Doing that foundational work early pays off for years.
Q5) What is the first type of insurance a new nonprofit should consider?
Pamela Davis: General liability. It is the basic “slip and fall” coverage. Many nonprofits think they have no risk, but if they host fundraisers or events, people can get hurt. Also, venues often require proof of general liability insurance before allowing you to rent or use their space.
Q6) What about board insurance, is that important for small nonprofits?
Pamela Davis: Yes. Pamela refers to it as Directors and Officers coverage, or Board and Executive coverage. For a small, all volunteer nonprofit with no employees, it can be relatively inexpensive. A major driver of cost in this coverage is employment practices exposure. If you have no employees, that risk is lower, so the cost should be more manageable.
Q7) What other coverages might a small nonprofit need as it grows?
Pamela Davis: It depends on what the nonprofit does, but common additions include:
- Property and contents coverage for computers, desks, and equipment, even if you do not own the building.
- Social service professional coverage if staff provide services where a “professional lapse” could cause harm.
- Improper sexual conduct and physical abuse coverage (often called sexual abuse and molestation coverage), especially for nonprofits working with vulnerable populations. Pamela notes this has become significantly more expensive.
- Auto insurance if you own vehicles.
- Non-owned or hired auto if volunteers or staff drive on behalf of the nonprofit, even if the nonprofit does not own vehicles.
Q8) Is there a nonprofit size that is “too small” to get insurance?
Pamela Davis: Pamela’s view is that if you are doing activities in the community, you are vulnerable, even with a small budget. She notes they do see nonprofits with $25,000 to $50,000 budgets seeking coverage. Stephen adds a real example: a small group raising money through a single annual golf fundraiser still has meaningful risk and should consider coverage.
Q9) If a nonprofit only has one event a year, can they buy a one day special event policy?
Pamela Davis: They can, but Pamela cautions against relying on it. A one day policy covers only the event day, not the work leading up to the event and after it. Sometimes the minimum premium for a one day policy can even be higher than an annual policy. Her point is to at least compare options, because a year round policy may be the better value and better protection.
Q10) What does the process look like to get a quote and purchase coverage?
Pamela Davis: Go to their site and click Get a Quote. You enter basic information like location and organization name. They screen for eligibility since they are not yet in all 50 states. Then the nonprofit is connected with a broker. They work through a network of brokers who understand nonprofits and treat them respectfully. The broker helps fill out the application and represents the nonprofit through underwriting.
Q11) Why do you work through brokers, and how are they different from “agents”?
Pamela Davis: The brokers are not exclusive agents of the insurer in the way people think of State Farm style agents. They represent the nonprofit. The alliance refers nonprofits to brokers they trust because those brokers know nonprofits, ask the right questions, and do not treat small organizations like a nuisance.
Q12) What is your advocacy work, and why does an insurer do advocacy at all?
Pamela Davis: Two major areas:
- Federal law change: When the alliance started, there was not a clear federal pathway for insurers like them to be 501(c)(3) nonprofits. Pamela spent about seven years lobbying Congress to make it possible.
- State level legal reform: Their team works with multiple states to help craft laws so nonprofits should pay when they are at fault, but are not unfairly held liable for harms they did not cause. Pamela cites a recent law in Texas that her staff helped draft.
Q13) Have you faced opposition while building this?
Pamela Davis: Yes. Pamela shares two examples:
- Early on, a large association allegedly tried to discourage funders from supporting her work because they wanted to create a revenue generating insurance program with a commercial insurer and did not want competition.
- After the organization launched, a service provider abruptly ended a key service relationship, effectively betting the alliance was too small to fight it. The alliance scrambled, survived, and that other organization later went out of business.
Her lesson: keep persevering.
Q14) What has helped the organization survive and grow for 35 plus years?
Pamela Davis: Two big drivers:
- Mission clarity: They exist to serve nonprofits for the long run, not to maximize profits for shareholders.
- People and culture: Employees have stayed for decades, and the organization is powered by staff who care deeply about the mission. Pamela notes it is challenging because insurance is a high paying industry and they are a nonprofit, but people still join and commit because the work matters.
Q15) How did you market and grow before the internet?
Pamela Davis: Pamela literally got into the car with a map and drove to meet brokers. She packed days with multiple broker meetings and presented at nonprofit association gatherings where nonprofits were actively seeking solutions. She also spent time convincing county risk managers and government stakeholders that the alliance was legitimate and that nonprofits funded by counties should be allowed to use their coverage.
Q16) Why did you expand beyond California, and what did that take?
Pamela Davis: Other states kept asking for help. But insurance is heavily regulated, and expanding beyond California required creating an entirely new company structure. Pamela asked the board for two years to research and plan. She raised funding for a business plan and set a clear requirement: she wanted $10 million in grants so expansion would not jeopardize the California organization. She ultimately received $5 million from the Gates Foundation and $5 million from the Packard Foundation, landing near the two year mark.
Q17) What is a “risk pool” and how does it work in simple terms?
Pamela Davis: In California, state law allows nonprofits to pool together to jointly insure, forming a structure that functions like an insurer. They also buy reinsurance from global insurance companies, meaning they cover losses up to a certain point, then reinsurers cover large claims above that. Outside California, their entity is a risk retention group regulated as an insurer through Vermont. They also have a separate nonprofit services organization that holds staff and tech assets and provides operational support on a cost basis.
Q18) What operating advice do you give nonprofit leaders who want to last?
Pamela Davis: Do not assume it ever becomes easy. Every year brings new challenges. She also warns nonprofits against blurring governance lines, acting as if the nonprofit belongs to the executive director rather than the public it serves. Those are the organizations that see the worst claims because corners get cut and accountability erodes. She also emphasizes building a mission driven culture across the whole team, especially frontline staff who interact with members day to day.
Q19) What does the future look like for nonprofit insurance?
Pamela Davis: She expects property insurance to get harder across the industry, partly due to climate related risk, and nonprofits are often in older buildings that insurers view as less desirable. On liability, the alliance is positioned to expand into more states due to a major technology upgrade. She also shares a concerning trend: a foundation was non renewed due to its democracy involvement, and other carriers declined for similar reasons. Pamela frames insurance capacity as essential to keeping the nonprofit sector functional.
Q20) Why did you create Blue Avocado, and what is it?
Pamela Davis: Blue Avocado is a free online magazine published by and for nonprofits at blueavocado.org. The goal is peer learning and practical guidance without talking down to nonprofits. Pamela wanted a platform where people doing the work share experience in a readable, actionable way.
