Your South Dakota nonprofit is not legally required to carry workers compensation insurance, because the state makes coverage optional for every private employer, nonprofits included. Once you have paid staff, though, the same risk applies as anywhere else: an uninsured nonprofit whose employee is hurt can be sued for damages or made to pay double benefits.
Who this is for: Directors and boards of South Dakota nonprofits deciding whether their paid staff, officers, and volunteers need workers comp.
The short version
- No South Dakota law forces a nonprofit to carry workers comp, whatever its size.
- Paid employees are the reason to buy it: without coverage a hurt worker can sue or elect double benefits.
- Nonprofit officers are not automatically treated as employees the way for-profit officers are, so the board decides whether to include them.
- Volunteers are generally not employees, but a stipend or in-kind pay can blur the line and should be reviewed.
- Grants, leases, and larger funders often require proof of coverage as a condition.
Officers and volunteers are treated differently
For-profit corporate officers are covered by default in South Dakota, but nonprofit officers are not swept in the same way. A qualifying nonprofit that participates in the workers comp system can choose to include a duly elected or appointed officer in the coverage it buys, but it is an opt-in, not an automatic rule. Volunteers are generally outside the system because they are not paid, but the picture changes if a volunteer receives a stipend, free housing, or other compensation, which can make them look like an employee. If your people mix paid and unpaid roles, it is worth reviewing each one.
Who is covered at a nonprofit
| Person | Default treatment | What to do |
|---|---|---|
| Paid employee | A covered worker, the main exposure | Carry a policy to cap risk and meet grant terms |
| Nonprofit officer | Not automatically an employee | Board decides whether to include them in coverage |
| Unpaid volunteer | Generally not an employee | Confirm no stipend or pay changes that |
| Stipended volunteer | May look like an employee | Review the arrangement before assuming they are exempt |
Why nonprofits with staff usually carry it
The case mirrors any small employer. Once you have paid staff, one serious injury without coverage can turn into a lawsuit or a doubled benefit award that a tight nonprofit budget cannot absorb. Funders reinforce the point: many grants, government contracts, and commercial leases require proof of coverage before releasing money or space. Buying a policy protects both your people and your ability to keep the doors open.
A Mitchell example
Illustrative, not a quote. A Mitchell youth nonprofit has five paid employees, a volunteer board, and a handful of stipended program mentors. The state does not require workers comp, but the board buys a policy to cover the five employees. It reviews the stipended mentors, since their small payments could make them look like workers, and includes them to be safe. A state grant requires proof of coverage, which the nonprofit already has ready. See our workers comp for nonprofits page.
Real questions South Dakota owners ask
Does our South Dakota nonprofit need workers comp?
No. Coverage is optional for every private employer in South Dakota, including nonprofits. But once you have paid staff, going without a policy exposes the organization to a lawsuit or double benefits if a worker is hurt, so most nonprofits with employees carry it.
Are our nonprofit officers automatically covered?
No. Unlike for-profit corporate officers, nonprofit officers are not automatically treated as employees in South Dakota. A participating nonprofit can choose to include a duly elected or appointed officer in the coverage it buys, but it is an opt-in decision for the board.
Do we have to cover volunteers?
Generally not, because volunteers are unpaid and are not employees. The line can blur if a volunteer receives a stipend, free housing, or other compensation, which can make them look like a worker, so review any paid or in-kind arrangement before assuming it is exempt.
What about stipended interns or mentors?
Treat them carefully. A stipend or other pay can push someone from volunteer toward employee, and an uninsured injury to that person can become a claim. Many nonprofits include stipended roles in their policy to remove the doubt.
A grant requires proof of coverage. Do we need a policy?
In practice, yes. If a grant, government contract, or lease requires proof of coverage, you need a policy to satisfy it, even though the state does not require one. We can issue proof of coverage the same day once you are covered.
What happens if a paid employee is hurt and we have no coverage?
The nonprofit stays fully liable. The hurt employee can sue the organization for damages or elect double workers comp, meaning twice the normal benefits, and a tight budget can be badly strained by either outcome.
Is workers comp expensive for a small nonprofit?
It depends on payroll and the kind of work your staff do. Office and program roles usually price low, while physical or transport-heavy work costs more. We shop your class of work so office staff are not priced like a field crew.
Why South Dakota owners choose Morrow
- We shop the right market for you. South Dakota workers comp is optional, so Morrow first helps you decide whether to carry it, then places coverage fast through the state's competitive private market of authorized carriers, since South Dakota has no state fund and no monopolistic fund of any kind.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related South Dakota guides
Every South Dakota business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in South Dakota (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- South Dakota nonprofit workers comp
This guide is general information, not legal advice. South Dakota rules and penalty amounts can change, so verify current requirements with South Dakota Department of Labor and Regulation, Division of Labor and Management or a licensed advisor before you rely on them. Last updated: July 2026.