Operating a nonprofit organization is often mistakenly associated with the absence of benefits. However, a survey by Nonprofit Times found that 87 percent of nonprofits offered their employees some type of medical plan. What makes nonprofits different from larger enterprises is their often restricted budget.
This means that nonprofit organizations must offer a reasonable, but not excessive, compensation package which will help them maintain their tax-exempt status while attracting and retaining top talent. Continue reading to learn more about employee benefits and how they affect nonprofits.
Nonprofit Compensation Packages
Building a good compensation package can be an involved process, beginning with the pay compensation. Nonprofit organizations are legally required to pay their employees the federal or state minimum wage. Nonprofits are advised to research what level of pay their competitors are offering to get a general idea for establishing pay new employees.
Salary is not the only component in a compensation package. Job seekers also want to know what employee benefits are being offered and how they compare to similar businesses in the industry.
General Nonprofit Employee Benefits Plans
Many nonprofits offer the following employee benefits:
Many nonprofits offer employer-sponsored health plans or assistance for their employees towards the cost of medical, dental and vision. Wellness programs may also be offered as a way to improve or maintain employee health through proper diet, exercise, illness prevention and stress management.
Nonprofit organizations may also include personal benefits in their employee benefits package. Maternity, paternity and adoption leave can help families maintain their finances during major milestones in their lives. Other personal benefits include employee assistance programs, short-term disability insurance, training and education reimbursement and opportunities for career advancement.
Saving for retirement often starts early in life and is crucial for financial security later in life. Nonprofits may choose to offer retirement plans or pensions to employees, such as 401(k)s.
Depending on the business or industry, some nonprofits may choose to offer creative benefits to employees. Some of the most popular options include childcare, stock options, office ergonomics, company care use, free meals, bonuses, product discounts, commission, gratuity, student loan repayment assistance, promotion panels, employee referral bonuses and paid housing.
Time Off Benefits
Employees often value time off from work to deal with personal issues or just to enjoy some rest and relaxation. To maintain a positive work environment, employers may offer their staff certain time-off benefits. These benefits may be in the form of paid time off, sick leave or vacation time.
Despite common misconceptions, the Affordable Care Act (ACA) does not require nonprofit employers to provide employees with medical coverage. However, any employer that has 50 or more full-time equivalent (FTE) employees may face a penalty if they do not provide health coverage. Smaller employers can save money on medical coverage by purchasing health insurance using the
Small Business Health Options Program (SHOP).
Nonprofits can also enjoy certain perks when they choose to offer medical coverage to staff members. Employers with 25 or fewer FTEs, who pay at least 50 percent of their employee’s health insurance premiums, may qualify for a Small Business Health Care Tax Credit. This “tax credit” is generally provided to nonprofits in the form of a refund.
Fringe Benefits for Nonprofits
Nonprofit organizations often accompany employee salaries with a variety of fringe benefits. Offering non-wage perks to employees can help nonprofits compete for top talent in the corporate world. The right fringe benefits can help improve the quality of life of employees making them happier and healthier.
There are many types of fringe benefits that nonprofit organizations can offer, ranging from childcare discounts and parking spaces to on-site food and signature products such as coffee cups and tote bags.
Some organizations offer benefits in the form of betterment programs. Professional development programs, such as mentoring, coaching or memberships in professional or trade organizations can provide employees with the opportunity to learn and improve. Educational reimbursements, tuition plans and sabbatical time are optional fringe benefits that can be a major selling point to job candidates.
Many employees favor financial perks from a job to help balance their salary. A health spending account (HSA) is one such financial perk that helps eliminate the tax linked to personal medical costs. With an HSA, employees can spend the full amount allocated by their employer for health and dental services; there are no premiums and employers can enjoy paying for health services using non-taxable dollars.
Importance of Employee Benefits
It can be easy to underestimate the value of employee benefits. However, as the U.S. job market tightens it has become more difficult for nonprofits to find the best and brightest candidates for the job. A well-rounded compensation package can make a significant difference in an organization’s ability to attract and retain great employees.
According to an Employment Confidence Survey by Glassdoor, 79 percent of employees reported that they would prefer new or extra benefits over a pay increase.
Some of the most valued benefits included health insurance, performance bonuses, paid time off or vacation time, paid sick days and 401(k) plans. Employees that receive these types of benefits often experience greater job satisfaction which can directly affect retention rates.
One of the top reasons for nonprofits to offer employee benefits is to become more competitive. There is no doubt that a comprehensive employee benefits package helps drive a business’s ability to hire top talent but it also makes them stand out within the industry. Job seekers are more likely to choose an organization that is known to treat its employees generously.
Speak with a Business Benefits Consultant
Owners of nonprofit organizations are constantly having to make difficult budget decisions on behalf of their business. The decision to offer employee benefits is one such choice that can significantly impact both employees and the business as a whole. Contact the Business Benefits Group to speak with an experienced consultant to learn more or to acquire employee benefits for your nonprofit.