How to avoid legal issues with volunteers at nonprofits

Even small gestures like offering gift cards or covering gas can cross legal lines if you’re not careful. This article breaks down the most common risks nonprofits face with volunteers, and how to avoid them, so your team can stay focused on impact without the worry.

The legal landscape of volunteering

Before you can protect your nonprofit from legal issues, it helps to understand how the law actually sees volunteers. Just because someone isn’t getting paid doesn’t mean the rules don’t apply.

Legally, a volunteer is someone who offers their time freely, without expecting money or benefits in return. But that line can get blurry fast. If a volunteer gets a gift card, a stipend, or even a regular “thank you” meal, it might look more like a job than a gift in the eyes of the law. And that can open the door to problems you don’t want.

There’s also a big difference between federal and state laws. The Fair Labor Standards Act (FLSA) lays out some basic rules, but each state can have its own take. For example, what counts as “reasonable” volunteer work in one state might raise red flags in another. Public sector rules can be even more strict.

So if you’re unsure, that’s okay. The point is to stay curious, ask questions, and check that your setup makes sense legally, not just ethically.

The role of volunteer managers in legal compliance

If you're in charge of volunteers, you're also part of making sure everything stays above board legally. That doesn't mean you need a law degree, but it does mean your systems and communication matter a lot.

Volunteer managers are usually the first point of contact, and that’s where legal clarity begins. It starts with the basics: having clear job descriptions, setting expectations early, and keeping good records. These small things make a big difference if questions ever come up later.

One big area to watch is making sure volunteers aren’t doing the same tasks as paid employees in a way that replaces staff. That’s called "displacement," and it can cause legal trouble. If a volunteer role looks too much like a job, the law might say they should be getting paid.

Good managers also make space for training and check-ins. Volunteers need to understand not just what they’re doing, but what they shouldn’t do. And when volunteers have a clear sense of their boundaries and responsibilities, it helps everyone feel safer and more confident.

Legal issues nonprofit organizations commonly face

Even with the best intentions, nonprofits can run into legal issues with volunteers, often because something small got overlooked. The good news? Once you know what to watch out for, most of these problems can be avoided.

One of the biggest risks is liability. If a volunteer gets hurt while helping out, or causes harm to someone else, the organization can be held responsible. That’s why having proper waivers and insurance in place matters.

Another issue is misclassification. Sometimes volunteers are treated more like employees, especially if they have regular hours, specific job duties, or get small payments. Even a $25 gift card can raise questions if it looks like compensation.

Wage laws are another tricky spot. According to labor laws, you can’t just label someone a volunteer and skip paying them for work that would normally be a paid position. If a volunteer is doing the same tasks as a staff member, it might not be legal, even if they agreed to do it for free.

And don’t forget about privacy. Volunteers often get access to sensitive info, like donor lists, event budgets, or even personal data. If that info isn’t protected, it can lead to legal trouble, lost trust, or both.

Policies that help avoid legal issues

Having the right policies in place is one of the simplest ways to stay out of trouble. These don’t need to be fancy or full of legal jargon, they just need to be clear, consistent, and easy for everyone to understand.

Start with a volunteer agreement. This isn’t a contract, but it helps set expectations on both sides. It should explain the role, outline boundaries, and make it clear that the volunteer isn’t being paid. It’s a small step that offers a lot of protection.

Role descriptions are just as important. Volunteers should know exactly what they’re responsible for, and what’s off-limits. This helps prevent them from accidentally stepping into duties that belong to paid staff.

Don’t skip background checks and screening, especially if volunteers are working with kids, handling money, or representing your organization in the community. A little upfront work can prevent serious issues down the road.

And be sure to understand the Volunteer Protection Act. It’s a federal law that protects volunteers from personal liability in most situations, but only if your organization is following the rules. That means offering training, providing a safe environment, and keeping things well-documented.

Essential training for volunteers and managers

Training isn’t just about showing someone how to do a task, it’s about making sure everyone knows how to do it safely, legally, and in a way that reflects your organization’s values. A little training upfront can save you from a lot of headaches later.

Start by making sure volunteers understand your policies. This includes things like how to report concerns, what they’re allowed to do, and what kind of situations they should avoid. Even simple reminders, like not sharing donor info or taking photos without permission, can go a long way.

For volunteer managers, training should include how to spot red flags. That might be a volunteer taking on too much responsibility, or doing tasks that seem more like paid work. The earlier you notice these things, the easier they are to fix.

It’s also smart to document your training sessions. Keep sign-in sheets, handouts, or notes from meetings. That way, if questions ever come up, you can show that your organization took the right steps.

Training doesn’t have to be complicated. What matters most is that it’s thoughtful, consistent, and that it helps volunteers feel both confident and supported.

Implementing insurance and risk mitigation strategies

Even when everything is running smoothly, accidents can still happen. That’s why having the right insurance and risk plans in place is so important, it’s one of the smartest ways to protect both your nonprofit and your volunteers.

Start with general liability insurance. This covers things like injuries or property damage that happen while a volunteer is helping out. Some organizations also add volunteer accident insurance, which helps cover medical costs if someone gets hurt.

If your volunteers are driving, delivering items, or working offsite, you’ll want to double-check that your policy covers those activities. Not all plans do.

It’s also a good idea to use waivers. These aren’t foolproof, but they show that your organization has been transparent about the risks. Just make sure they’re easy to understand, and that volunteers actually read and sign them.

Lastly, if you offer reimbursements for things like gas or meals, keep it small and document everything. You don’t want these perks to look like payment, because that could raise legal questions about employment.

When it comes to risk, your goal isn’t to remove all of it, it’s to manage it. And with a few smart steps, you can build a setup that feels secure for everyone involved.

Real-world examples and common mistakes to avoid

Sometimes the best way to learn is by looking at what went wrong for someone else. We’ve seen nonprofit teams with the best intentions get into trouble because of a few small missteps. Here’s what to watch for.

One organization we worked with let volunteers handle money at events without much training. Nothing bad happened, but they didn’t realize that without clear policies, they were opening themselves up to risk. Once we helped them put systems in place, including basic finance training and a check-in/check-out process for cash handling, they felt way more confident.

Another group gave out gift cards to thank volunteers. That sounds generous (and it was), but the amounts were a little too high and too regular, like clockwork every month. That pattern looked a lot like a paycheck, and it raised red flags during a grant audit. A small change, like offering handwritten notes or occasional team lunches instead, helped them keep showing appreciation without blurring the legal lines.

Then there’s the mistake of skipping documentation. We’ve seen nonprofits struggle to prove a volunteer was properly trained or that safety policies were shared. Even if you trust your team, it’s always better to have records. It doesn’t take much, but it could make a huge difference down the line.

Bottom line: most legal issues with volunteers start small. But with the right habits and a little structure, you can steer clear of the big stuff.

Visual tools and templates to simplify compliance

Staying legally compliant doesn’t have to be overwhelming. With the right tools, you can save time, stay organized, and make sure nothing slips through the cracks. Even better, you can share these tools with your team and volunteers to keep everyone on the same page.

Start with a volunteer agreement template. This should outline roles, expectations, and a reminder that the volunteer is unpaid. It doesn’t need to be full of legal terms, just clear, simple, and easy to sign.

Next, build a compliance checklist. This could include steps like background checks, signed waivers, a review of safety procedures, and confirming role descriptions. It’s a quick way to make sure you’re covering your bases for each volunteer who joins.

A volunteer handbook can also help. This doesn’t need to be a huge document. Even just a few pages that cover your policies, your values, and what volunteers should know before they start can make a big difference. The more you spell things out early, the fewer questions and risks you’ll face later.

And don’t forget visuals. A simple flowchart of your onboarding process or a one-page “know before you start” graphic can help folks absorb info faster, and feel more confident walking into their role.

State-specific considerations and how to stay current

One thing that catches a lot of nonprofits off guard is how much volunteering laws can vary by state. What’s totally fine in one place might be a problem somewhere else. That’s why it’s important not to rely only on general advice, you need to know what your state says, too.

Some states have stricter rules around things like background checks, youth volunteers, or how much you can reimburse someone without it looking like payment. Others have specific laws about what volunteers can do for government-funded programs. If you're not checking your state guidelines regularly, it’s easy to miss updates.

So, how do you stay on top of it? You don’t have to do it alone. A few good resources include your state attorney general’s website, local nonprofit associations, or even your insurance provider. They often put out alerts or have guides that are easy to follow.

And when in doubt, don’t be afraid to talk to a nonprofit attorney. A quick check-in with someone who knows the law can save your team from bigger issues down the road.

Keeping your policies up to date isn’t just a legal move, it also shows your volunteers you care enough to protect them and the mission they believe in.

Safe, smart, and mission-ready

Volunteers are the heart of so many nonprofits, but protecting that heart means doing more than just saying thanks. It means setting up smart systems, paying attention to the details, and making sure your team understands how to stay on the right side of the law.

Legal issues with volunteers aren’t always loud or obvious. They often start small, an extra gift card here, a missing waiver there. But when you take the time to put good policies, training, and tools in place, you’re not just avoiding problems, you’re building trust.

We’ve worked with nonprofits that went from feeling overwhelmed to feeling in control. All it took was a little structure, clear communication, and the right support.

Ready to protect your mission and your volunteers? Let Harness help you build a legally sound and scalable volunteer strategy.

Frequently asked questions

What are the most common legal issues with volunteers?

The biggest ones are misclassifying volunteers as employees, failing to provide proper training, skipping background checks, and not having clear role definitions. These can lead to liability, wage claims, or even lawsuits.

Can I give volunteers a stipend or gift card?

It’s possible, but you have to be careful. Anything that looks like regular payment could make a volunteer look more like an employee in the eyes of the law. Keep gifts small, occasional, and clearly labeled as appreciation, not compensation.

Do I need insurance for my volunteers?

Yes. General liability and accident insurance can help protect your organization if someone gets hurt or causes damage while volunteering. It’s a key part of your risk management plan.

What should be included in a volunteer agreement?

At minimum, it should clarify that the role is unpaid, outline tasks and boundaries, and share any important policies. It’s about setting expectations clearly from the start.

How do I stay current on volunteer laws in my state?

Check your state attorney general’s site, join your local nonprofit association, or consult with a nonprofit attorney. Laws change, so it’s smart to review your policies at least once a year.