FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Charity insurance
Grant-making trust and foundation insurance is the set of policies protecting an endowed charity's trustees, money, data and property. It matters because a foundation's risks sit in its decisions and payments, not its premises.
Part of: Charity insurance
In short
Grant-making foundations usually need less liability cover than operational charities but more protection for trustees, investments and payments. A typical programme combines trustee indemnity or D&O, crime cover with social engineering protection, cyber, property including any let investment property, and employers' and public liability, with professional indemnity where staff advise grantees. Trustees must follow the Trustee Act 2000 investment rules, and insurance usually defends allegations of breach of duty rather than replacing lost investment value. Review cover when the endowment, investment strategy or grant activity changes.
A grant-making foundation usually needs less liability cover than an operational charity and more protection for its money, its decisions and its trustees. It may employ a small team, run no services and own no vans, yet hold an endowment or investment portfolio worth many times its annual spend. The claims and losses that hurt foundations tend to come from governance, investment decisions, payment fraud and data, not slips and trips.
The core of a typical programme is trustee indemnity insurance or a wider charity D&O policy, crime cover that responds to theft and fraudulent payments, cyber cover, property cover for offices and any investment property, and employers' and public liability. Professional indemnity becomes relevant where the foundation gives advice or support to grantees rather than just money. The Charity Commission guidance on charities and insurance (CC49) reminds trustees that they have a duty to protect the charity's assets and resources, and that duty is the starting point for every decision below.
The table maps the exposures most foundations face to the policy that commonly responds, subject to the policy terms.
| Exposure | Cover that usually responds | Points to check |
|---|---|---|
| Claim that trustees breached their duties, including on investment | Trustee indemnity or charity D&O | Investment and loss of value exclusions, who counts as an insured person |
| Grant paid to a fraudster's account after changed bank details | Crime (fidelity) with third-party or social engineering cover | Verification conditions, sub-limits for deception losses |
| Theft by an employee, trustee or volunteer | Crime or fidelity guarantee | Whether trustees and volunteers are included |
| Breach of applicant or grantee data, ransomware | Cyber | Incident response costs, regulatory investigation cover |
| Fire or flood at offices or let investment property | Property, with loss of rent where relevant | Reinstatement values, unoccupancy, tenant obligations |
| Negligent advice to a grantee on governance or programme design | Professional indemnity | Whether advice is a declared activity |
| Employment dispute with staff | Employment practices liability or legal expenses | Whether D&O includes an EPL section and a shared limit |
For an endowed foundation, the biggest governance decisions are usually about investment. The Trustee Act 2000 (see our Trustee Act 2000 explainer) sets the framework for trust-based charities. The Charity Commission's legal underpinning to its investment guidance (CC14) summarises the key rules:
The Commission refreshed CC14 in August 2023 to reflect the High Court's Butler-Sloss judgment on responsible investment. Trustees who follow a documented process, take proper advice and record their reasoning are in a far stronger position if a decision is later challenged.
Insurance has limits here. Trustee indemnity and D&O policies are designed to meet defence costs and damages for alleged breach of duty, not to replace investment losses as such. Many wordings exclude or restrict claims arising from the performance of investments, so the question for a foundation is whether a claim alleging a flawed investment process would be defended. Under section 189 of the Charities Act 2011, trustees may buy indemnity insurance with charity funds only if they are satisfied it is in the charity's best interests, and the policy must exclude criminal fines, regulatory penalties and conduct a trustee knew was against the charity's interests. See common trustee indemnity exclusions and how much trustee indemnity cover to buy.
A foundation's core activity is sending money to third parties, which makes it an obvious target. Common patterns include an email that appears to come from a grantee asking for payment to new bank details, a fake application from a cloned charity, or an insider redirecting a grant. These losses sit awkwardly between policies: crime and cyber cover treat payment fraud differently, and many crime policies cover deception losses only with a sub-limit and a call-back verification condition.
The Commission's serious incident reporting guidance lists fraud, theft and cyber crime as reportable financial crime. Trustees are responsible for reporting promptly, fraud and cyber crime should also be reported to Report Fraud with a crime reference number, and charities with income over £25,000 confirm in the annual return that there were no unreported serious incidents. Cyber cover usually helps with forensic, legal and notification costs after a breach of applicant data, which may involve the Information Commission (formerly the ICO). Internal financial controls guidance (CC8) is the natural reference for the controls insurers ask about. See charity crime and fraud insurance and charity cyber and donor data insurance.
These examples are illustrative only and do not describe real claims.
A finance officer receives a convincing email from a grantee's address asking for the second instalment to go to a new account. The money is lost. Whether a crime policy responds usually depends on its social engineering wording, any sub-limit, and whether the charity followed its own verification procedure.
After a sharp fall in the endowment, a co-trustee and the founder's family allege the board ignored its investment policy. Trustee indemnity or D&O may meet defence costs for the allegation of breach of duty, subject to any investment exclusion, but would not usually restore the lost value.
A foundation runs a capacity-building programme in which its staff advise grantees on governance. A grantee alleges the advice led to a funding loss. A trustee indemnity policy may not respond to a claim from a third party about professional advice, so separate PI may be needed.
Underwriters assessing a grant-maker commonly look for:
Common mistakes include assuming trustee indemnity covers investment losses, buying crime cover without social engineering protection, leaving let investment property on a policy written for offices, and setting limits by habit rather than by the size of the endowment and the payments flowing out each month.
Trustees should look again at the programme when the endowment value moves materially, the foundation changes investment manager or strategy, it starts making larger or overseas grants, it begins offering advice or running programmes directly, or after any fraud attempt or serious incident report. A merger, a spend-down decision or a move from trust to incorporated form are also triggers. An annual review that is minuted helps show the board considered its insurance properly.
For an independent look at an existing programme, see our charity insurance programme review, the wider insurance programme review and the charity insurance broker guide. Apex arranges trustee indemnity, crime, cyber and property cover for grant-making charities; a broker reads every enquiry.
Leave a name and number and a broker who works with charities will call you back, usually the same working day. Or ask for a free second opinion on your charity’s insurance.
Or email your schedules and renewal date to info@apexinsurancebrokers.co.uk, or call 0117 325 0027.
Many do. Trustees of endowed foundations make large investment and grant decisions, and a challenge from co-trustees, beneficiaries or the Charity Commission can generate significant legal costs. Under section 189 of the Charities Act 2011, trustees may buy the cover with charity funds if they are satisfied it is in the charity's best interests. The policy cannot cover criminal fines or conduct a trustee knew was against the charity's interests.
Usually not as such. Trustee indemnity and D&O policies respond to claims alleging breach of duty, mainly by meeting defence costs and damages, and many exclude or limit claims arising from investment performance. A documented process that follows the Trustee Act 2000 and the Commission's investment guidance, including proper advice and regular review, is the main protection.
It can be, subject to the policy terms. Theft by employees is the core of crime cover, but deception of staff into paying a fraudster usually needs a specific social engineering extension, which is often sub-limited and conditional on verifying changes to bank details by an independent call-back. Some cyber policies also offer limited funds transfer cover.
Only if it gives advice or services that a third party could rely on. A foundation that simply makes grants has limited PI exposure. One that advises grantees on governance, runs programmes or provides technical assistance may face negligence claims, and trustee indemnity is not designed for those. Tell your broker exactly what support staff provide.
Send us your current schedules, policy wordings and renewal date. We will review the whole programme and give you a one-page summary for your board: what to keep, what is missing and what to change. No fee and no obligation. Or call 0117 325 0027.
Get a second opinion Get a quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
