How to Start a Lending Library Part 1: Insurance and Operations

It’s amazing how many inquiries we get every week from all over the country (and the world!) from people wanting to start a tool or other type of library.  Once someone hears about “libraries that lend out tools rather than books,” they start to dream of having access to a thousand tools without having to store and maintain them all personally. However, that blissful moment is often rapidly succeed by the thought, “do I really want to take on the liability of lending things to people with which they can accidentally cut off their body parts?”

Insurance & Legal

It is strongly recommended that if you will be loaning out tools, you take some basic precautions to protect yourself. There are insurance companies (including Philidephia) that will provide general liability insurance to tool libraries and workshops for about $600 to $700 per year.  If your library is connected to a parent organization (non-profit, business, etc.) then you can also talk with your existing insurance agency about adding a rider or amendment for your tool library operations.

A number of libraries also have provided their member agreements and liability waivers online, so you have a starting point for creating your own.  While none of us love dealing with the liability and legal issues, it is important to set things up right from the start to protect yourself and the valuable community resource you’re building. There are even legal services that will offer pro-bono services to help look over your documents and make sure you’re protected.

For those people not scared off by the liability issues, the second most common question we receive is “how do we actually manage membership, inventory and run the library?”

Inventory & Operations

If you were starting your tool library 20 years ago, or even three years ago, your options to manage memberships, inventory and loans were not ideal.  They included “home grown” systems (paper ledger, spreadsheets, etc.), clunky “book library” software, or rental management software. For example, the West Seattle Tool Library has developed a slightly larger than average tool library with about 700 members, over 1,000 tools, and as many as 200 tools out on loan at any given time.  If they tried to manage this volume with inappropriate tools, it would put tremendous stress on their part time staff and volunteers, as well as, make management of the library nearly impossible with relatively limited resources.

Luckily, today there are  solutions designed specifically for managing tool and lending libraries including out own Local Tools web based service.  Local Tools allows you to manage members, inventory, loans, and track money, whiling embedding some of the “best practices” of running a lending library right into the systems.  Lending library management systems take the drudgery out of the process by handling everything from automatically emailing loan reminders, to displaying inventory online and tracking late fees. If you are thinking about starting a tool or lending library, and we are biased, we’d strongly recommend you check out (pun intended) both of these options.

While there can be risks to starting a tool library, and work in running it, the reward of building a community where everyone has affordable access to the tools and skills to fix, maintain and make things is incredibly rewarding.

Our next post will talk about other types of lending libraries, and our early experiences working with Kitchen Share SE (Portland), and how to get a “Kitchen Tool” library running in your area.

Tool Library Resources

Want to get started now?  There are a number of resources to help you get going:

Tool Library Starter Kit – Local Tools, in conjunction with Share Starter and the West Seattle Tool Library have put together a “Starter Kit” to help other communities get a lending library going. I reduces the time necessary in dealing with potentially complicated details by providing sample documents such as Sample Lease Agreements and Sample Delinquency Letters.

MAKE: How to Start a Tool Lending Library – this blog post was co-written by our own Gene Homicki, with Zero to Maker author, David Lang.  David outlines how a tool library can help provide a rallying point for the maker movement in your community.’s “How to Start a Tool Lending Library” – Patrick Dunn at the West Seattle Tool Library and Shareable put together a wonderful blog post on the subject. It includes interviews with a number of experienced operators as well as new entrants. The post adds focuses on answering the “why?” question about Lending Libraries.

Guide to Sharing – The Center for a New American Dream. in collaboration with, put out a Guide to Sharing, which includes a 10-Step guide to starting a Tool Library.

MAKE: How to Start a Tool Lending Library – this blog post was co-written by our own Gene Homicki, with Zero to Maker author, David Lang.  David outlines how a tool library can help provide a rallying point for the maker movement in your community.