The number of Americans volunteering for charity dropped dramatically during COVID-19 lockdowns. However, numbers have since rebounded to near pre-pandemic levels, according to the U.S. Census Bureau and AmeriCorps. If your nonprofit is still struggling to find enough volunteers, consider making unfilled positions more appealing to prospective volunteers. How? Start with tax and legal liability. No volunteer wants unpaid work to open the door to extra tax obligations or unanticipated lawsuits.
Answering to the IRS
It may not have occurred to you that federal or state taxing authorities would come after charitable volunteers. But it can happen. Your organization could inadvertently create taxable income for volunteers if you provide them with benefits, services or compensation beyond reimbursements. Reimbursements that exceed actual expenses are taxable. So, you should only reimburse actual out-of-pocket expenses incurred while performing volunteer services.
If volunteers occasionally need to cover costs with their own money (for example, purchasing decorations for an event or refreshments for a meeting), inform them in advance that they must provide you with records and receipts of their expenditures. Explain this policy both verbally and in writing.
See you in court
Volunteers also face a risk of being sued for their actions (or inactions) while performing services for your nonprofit. The threat is particularly significant with nonprofits that provide medical services or that work with vulnerable populations such as children or disabled people. However, even simple tasks, such as driving, can result in litigation.
The Federal Volunteer Protection Act of 1997 provides a partial shield for volunteers acting within the scope of their responsibilities. Many states have similar laws to protect volunteers. But the limitations on liability can vary significantly from state to state, with different limits, conditions and exceptions. Consult with your legal counsel to determine if state or local laws might impact your volunteers.
Insurance reduces risk
Keep in mind that volunteer protection laws don’t preempt the need for appropriate insurance coverage. Some state laws explicitly require nonprofits to carry insurance to limit volunteer liability. To minimize risk, carry comprehensive general liability insurance that specifically covers volunteers, as well as Directors and Officers liability insurance. If volunteers will operate your nonprofit’s vehicles, check whether your auto policy covers them and, if necessary, add them as insureds. Larger organizations might consider amending their bylaws to include a broad indemnification clause for volunteers if claims against them exceed insurance limits.
Additionally, consider implementing processes and procedures to mitigate the risks of harm or injury caused by volunteers. For example, devote time upfront to screen and train volunteers appropriately and restrict certain client-facing activities to employees. If you work with at-risk populations, it’s a good idea to perform background checks on volunteers and provide close staff supervision when volunteers are working with clients.
Other ideas
Tax and legal liability may not be top-of-mind for all volunteers, but it’s something you should consider when recruiting them. Other ways to attract people include writing detailed job descriptions or asking potential volunteers how they’d like to contribute to your organization — and then creating positions to meet their needs.
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