Cuts to Funding Mean Risks Will Pivot in Human Services Market

Human services organizations are the backbone of our local communities, providing essential services to vulnerable populations across health, education, housing, and more. These organizations often operate with limited resources and rely heavily on grant funding to sustain their programs. But the funding landscape is shifting–fast.

GrantExec found that between January and June 2025 alone, federal agencies canceled at least 690 grant programs, representing $19 billion in congressionally allocated funding. That’s more than 40% of the $48 billion federal grant market. For human services organizations, this isn’t just a budgetary concern but a strategic inflection point.

Funding cuts often prompt organizations to seek alternative ways to sustain their mission, such as diversifying services, launching fundraising campaigns, or forming new partnerships. But with every pivot comes a new set of risks that may not be covered by existing insurance programs.

When a human services organization shifts its operations–whether it adds new services, hosts events, or expands facilities–it’s not just the mission that changes. The risk profile does, too.

Consider a nonprofit that receives a donated building to expand its soup kitchen. In an effort to attract new funding, it decides to open a homeless shelter in a portion of the building with unused space. It’s a noble move, but one that introduces residential exposures, potential abuse or molestation liabilities, and new regulatory requirements. Without a proactive insurance review, these risks could go unnoticed until it’s too late.

Or take the example of a special fundraising event. A 5K fundraiser might seem straightforward, but if the route includes public roads and a participant is injured, the organization could be held liable as the event organizer.

These aren’t hypothetical scenarios; they’re real exposures that require thoughtful coverage strategies.

Experienced insurance agents add tremendous value by helping human services organizations anticipate and manage risks as they evolve. But they don’t do it alone. Carriers with specialized underwriting teams and nonprofit-focused products are essential allies in building coverage that keeps pace with change.

Proactive communication between agents and their clients is key to building insurance programs that reflect the realities of a changing operational landscape. Through regular check-ins and open dialogue, agents can uncover shifts in services, funding, or partnerships that may introduce new risks. These insights not only strengthen agent-client relationships but also inform smarter collaboration with carriers, ensuring coverage solutions are aligned with the organization’s evolving needs.

Here are three things to look for in a solution to ensure it can evolve with your human services clients:

• Carrier expertise. Carriers with underwriters dedicated to the human services industry understand the sector’s unique challenges. They’re attuned to emerging trends, such as funding gaps and program diversification, and they ask the right questions at renewal.
• Proactively reviewing and updating coverage. Insurance shouldn’t be static. As services evolve, so should coverage. For example, if a nonprofit begins offering medical-related services, its professional liability coverage may need to be adjusted. If it acquires property or hosts events, general liability and abuse/molestation coverage should be revisited. Emergency event management coverage is another key consideration, especially for organizations hosting onsite events. It’s critical to ensure these coverages are available and structured to support the organization’s changing operations and risk profile.
• Industry-tailored risk management programs. Carriers that specialize in human services open the door to risk management resources such as trainings, assessments, and expert consultation on mitigation strategies. That support can be as valuable as the coverage itself.

Human services organizations are doing some of the most important work in our communities. They’re resilient, resourceful, and deeply committed to their missions. But they’re also facing unprecedented challenges.

By understanding the pressures these organizations face and offering tailored guidance, agents and carriers together can build insurance programs that protect human services organizations as they continue serving those who need it most.