We help agencies by competing for grant funding and carrying out their work. The process of applying for and administering these grants is rigorous and time-consuming, but it allows nonprofits to fulfill our missions — food distribution, after-school learning programs, job training and other services.
But as we struggle through devastating, coronavirus-related financial losses, D.C. has made our path forward even harder by instituting new insurance requirements that cost thousands of dollars with little apparent purpose. D.C. has changed our grant agreements to require us to purchase eight types of insurance, with mandatory minimum levels of coverage for each one.
Like all businesses, we buy the insurance we need: general accident and liability coverage, directors and officers insurance and workers’ compensation. We choose to buy other coverage depending on our operations and risk. But the new D.C. grant agreements require us to buy $5 million in umbrella liability and $2 million in cyber liability coverage. Even our insurance brokers — who earn commissions when we purchase policies — say we do not need all of this insurance, particularly as our operations have changed during the pandemic.
Indeed, these requirements have little to do with our work. Urban Adventure Squad recently won a grant to provide after-school programs to a Ward 7 school. For similar programs, we have occasionally rented field trip buses. But in this year of virtual learning, we will not use buses even if schools reopen. Still, we must increase our current automobile coverage from $500,000 to $1 million. If purchasing additional coverage or a new, stand-alone automobile liability policy is not possible, we will have to buy an entirely new general liability policy just to comply.
Similarly, Living Classrooms was required to buy $2 million in “cyber liability insurance,” even though our grant is to train and hire young people from neighboring wards to maintain hiking trails and guide visitors in the D.C.-owned Kingman and Heritage Islands Conservation Area. We understand why D.C. should carry its own insurance against cyberattacks and data breaches, but forcing nonprofits to cover that liability is unreasonable and expensive. Raising our existing coverage from $500,000 to $2 million will cost us nearly $4,000.
We have laid off staff, cut expenses to the bone and are begging donors for funds so that we can remain standing until a coronavirus vaccine is widely available. Urban Adventure Squad is currently unable to meet its payroll obligations. Paying thousands of dollars for insurance we don’t need puts us closer to the edge. If we teeter over it, more people will lose their jobs and fewer families will receive our help. D.C. residents will be the losers.
So we propose two modest ideas: Relieve us of the requirement to buy expensive insurance we do not need, or create a fund to help us pay for it so that our money goes to families in need and not to insurers.
D.C. just launched a $100 million grant program to help about 1,800 restaurants, hotels, retail and entertainment businesses survive the winter. We know it is important to help small businesses, because that is what we are. We know restaurants and hotels employ and feed people, and so do we. Nonprofits also need relief as we continue to provide services through the winter.
Our organizations often teach the communities we serve about the importance of sustainability. The D.C. government’s move to force us into expensive insurance purchases is unsustainable for us and, in the end, hurtful to the people we all are committed to serving.