Similar to for-profit companies, nonprofit organizations rely on talented professionals to operate efficiently and grow their businesses. Today, most job candidates are interested in an attractive benefits package that includes incentives such as health insurance, paid time off and retirement.
Putting together a comprehensive employee benefits package can give a nonprofit organization a competitive edge while simultaneously boosting employee morale and productivity. Benefits, in combination with fair compensation, can also reduce employee turnover and retain top talent.
How Are Employee Benefits Different For Nonprofits?
There is a common misconception that nonprofit organizations do not generally offer benefits and instead rely on good-willed volunteers to further their cause. For many nonprofits, this is not the case; most nonprofit organizations have employees that receive competitive compensation and a full benefits package.
Many nonprofit organizations operate on a tight budget making it more difficult to offer employees benefits when compared to a for-profit company. However, this does not mean that nonprofit employee benefits are not possible. Nonprofits can offer many of the same benefits as for-profits, and must meet many of the same legal regulations.
Does The ACA Require Nonprofits To Offer Benefits?
The Affordable Care Act (ACA) does not require nonprofit employers to provide medical coverage to employees if they have fewer than 50 full-time equivalent (FTE) employees. Full-time equivalent means that an employee works 30 or more hours a week and at least 130 hours per month.
Employers that have 50 or more full-time equivalent employees must offer medical coverage to FTE employees or risk hefty penalties. Similar to for-profit companies, there are some advantages for nonprofit organizations that are offering health insurance.
For example, nonprofits that have 25 or fewer FTEs and who pay at least 50 percent of their health insurance premiums may qualify for a Small Business Health Care Tax Credit.
What Benefits Should Nonprofits Offer Employees?
It is important to remember that compensation alone will not always retain quality employees. Nonprofits must also consider offering a range of benefits that will attract job seekers and encourage existing employees to remain.
At a minimum, a nonprofit organization should offer health insurance that includes prescription coverage, retirement benefits, dental insurance and paid time off. Nonprofit organizations may also consider offering other employee benefits.
Here is a closer look at some of the top benefits and incentives that a nonprofit organization may offer to employees:
Group Health Insurance
Businesses often offer group health insurance to their employees at a lower cost compared to individual policies. Group health insurance can provide key benefits to both employers and employees, including significant savings and tax advantages. Due to the number of people included in a group health insurance policy, premiums tend to be lower and there is often greater coverage.
When offering group health insurance benefits to employees, be sure that the policy chosen complies with ACA requirements, meets the unique needs of employees and has premiums that fit the budget. Group health insurance should also include dental and vision for employees that may require these services.
Paid Time Off
Paid time off (PTO) is a common benefit offered by both for-profit and nonprofit businesses. PTO grants employees compensation for personal time off, including vacations, sick days and holidays. Although paid time off policies are not a requirement of the Fair Labor Standards Act (FLSA), they can be a highly attractive benefit for job seekers and employees.
While employers ultimately lose money when they offer paid time off to employees, the return on investment can be substantial. Employers who provide PTO to employees often see reduced levels of unscheduled absenteeism. In addition, paid time off can lead to increased productivity and performance in the workplace as employees are well-rested and generally happier.
Bonuses And Incentives
Employee benefits may include the occasional bonus or incentive. These “extras” can provide much-needed motivation and encourage employees to work towards a goal. Performance bonuses may be offered in a monetary form or as another type of reward, such as extra vacation time.
Workplace incentives also come in many forms, such as raises, profit sharing, stock options and signing bonuses. Not all incentives require nonprofits to spend excessive amounts of money. Recognition incentives include actions, such as praising employees or presenting employees with a certificate of achievement.
Appreciation incentives, such as hosting a company party or birthday celebration, can also make employees feel recognized for their hard work.
Retirement benefits are some of the most common benefits offered to employees. There are many types of employer-sponsored retirement plans that can help employees save for their future including defined benefit pension plans, SIMPLE plans, SEP plans, 401(k) plans, Roth 401(k) plans, 457 plans and 403(b) plans.
In addition to offering a retirement plan, employers can choose to make contributions toward their employees’ retirement. This contribution may be a specified percentage or may match the employee’s contribution.
Contributions are simple to make through payroll deductions.
Other Employee Benefits
The most common employee benefits include medical coverage, life insurance policies, paid time off, family leave, workers’ compensation and retirement planning. However, there are many other ways in which employees may be compensated or recognized.
Some nonprofits may also offer other types of employee benefits, such as specialist services, living stipends, college grants and scholarships, student loan repayments, continuing education, remote work flexibility, investment opportunities and covered travel expenses.
Fringe benefits are also fairly common and include a variety of non-cash payments that are used to attract and retain employees. These may include flexible medical or childcare spending accounts, tuition assistance, non-production bonuses and other child care benefits.
Speak With A Business Insurance Broker Today
Creating an attractive employee benefits package as a nonprofit organization may appear overwhelming but the process does not need to be complicated. Reach out to an experienced business insurance broker at Business Benefits Group today to learn more about nonprofit employee benefits or for assistance forming a benefits package