Most nonprofits operate on a tight budget, leaving minimal funds for a premium benefits package. Many organizations find ways to make it work; according to the Nonprofit Times, approximately 87 percent of nonprofits offer their employees some type of medical plan.
In order to succeed in the long-term, a nonprofit requires a strong team of qualified employees who are dedicated to the cause. Offering a competitive benefits package is an effective way to attract top talent and retain existing staff.
Here is a look at some of the most sought-after benefits that a nonprofit should consider offering to workers.
Health insurance is one of the most common benefits offered to employees by nonprofit organizations. There are many reasons to offer health insurance to workers which benefit both employers and employees.
Medical insurance can be costly to acquire but by participating in a group medical plan offered by an employer, employees can maintain healthcare coverage for themselves and their beneficiaries.
Group health insurance has certain tax advantages that make it an attractive option for nonprofits.
Group Health Insurance
For an employer, the funds paid towards monthly employee premiums are generally tax-deductible. Premiums paid by employees are paid with pre-tax dollars which can lower their taxable income. Some small businesses may also qualify for health care tax credits.
The most common types of group health insurance include: health maintenance organization (HMO), preferred provider organization (PPO), point of service (POS) and exclusive provider organization (EPO).
Vacation & Paid Time Off
Many nonprofit organizations choose to reward their employees for a job well done by offering a certain number of days for vacation and paid time off.
Creating a vacation and time off policy can give employees the freedom to plan important events without fear of losing income or their job. These benefits can also be used to incentivize employees to take much-needed time off to avoid burnout.
Although the terms ‘vacation time’ and ‘paid time off’ are often used interchangeably, they are different. Paid time off refers to any time that an employee is getting paid while away from work.
This time off may not necessarily be due to a vacation, but rather events such as an illness, disability, maternity or paternity leave, jury duty or holiday pay.
Employees often enjoy the flexibility that a PTO plan provides and they are less likely to lie about being ill or having a doctor’s appointment to get out of work. With an all-exclusive PTO policy, HR does not need to track vacation, sick and personal days separately, resulting in less administrative strain.
Performance bonuses can be an effective way to incentivize employees to strive towards excellence and to reward them for reaching specific goals. A performance bonus is defined as compensation that is beyond an employee’s normal wages.
Nonprofit organizations that offer performance bonuses generally define the maximum amount that an employee can earn for their exemplary performance. An extensive review process is usually required to determine if certain standards have been met before a performance bonus is considered.
Performance bonuses may be delivered to individuals or entire teams or departments. They may also be given out spontaneously or on a monthly, biannual or annual basis.
Although performance bonuses are typically counted as income for tax purposes, they can help employees financially and can be great for worker morale.
Remember to always put a bonus plan in writing to avoid confusion or misunderstandings regarding who may or may not be eligible.
Paid Sick Days
Paid sick days enable employees to take time off of work without losing pay. This type of benefit not only allows workers to recover at home but prevents ill employees from infecting others in the workplace.
Employees generally accrue sick days based on the employer’s unique sick leave policy. This may be a general policy that applies to all employees equally or may be based on an employee’s position within the company or the number of years of service they have provided to the organization.
Many businesses allow employees to roll their sick days over to the next year, while others set strict caps that limit the number of hours or days that can be accumulated before they are lost.
Although nonprofit organizations are not legally required to provide employees with paid sick days, this benefit can be a highly attractive perk.
Employee retirement plans provide a way for employers to help workers save money for retirement. A retirement plan can be an effective way to attract and retain top talent as nearly everyone wants to save for their future. Retirement plans can be even more advantageous for employees when employers choose to match employee contributions.
An employer-sponsored retirement plan is essentially a savings vehicle that many employers offer as a way to help employees save for retirement on a tax-advantaged basis.
Contributions are often taken directly from the employee’s paycheck each time they are paid which makes the process simple and hands-off.
Employers can choose from several different types of retirement plans, each with its own set of pros and cons. A 401(k) is one of the most common types of employer-sponsored retirement plans that allow employees the option to contribute up to $17,500 a year.
Other common types of employer-sponsored retirement plans include Roth 401(k) plans, 403(b) plans, SIMPLE plans, 457 plans, SEP plans and defined benefit pension plans. Nonprofit organizations should weigh the benefits and drawbacks of each option to determine which best fits their budget and needs.
Speak with an Experienced Benefits Consultant
Making the decision to offer benefits to employees that are not legally required can be stressful, especially for nonprofits that may have limited funds. However, making the important choice to offer a benefits package can have a positive impact on the business in the long-run.
If you need assistance building a comprehensive nonprofit employee benefits package, consider working with an experienced benefits provider. To learn more about employee benefits, contact a reputable benefits consultant at Business Benefits Group.