May 5, 2004 | Read Time: 4 minutes
Q. I recently joined the board of a new nonprofit group and we’re trying to get information on what employee benefits to offer our staff of three. Can you suggest any resources that might tell us what other charities offer their workers? Also, do any associations help charities pool their buying power to deliver benefits to their employees?
A. The only benefit that all employers, regardless of their nonprofit status or size, must provide to employees is unemployment insurance, says Tonia Papke, president of MDI Consulting, in South Orange, N.J., which offers financial-management services to nonprofit organizations.
The vast majority of employers also offer workers’ compensation, which is mandatory in 39 states. However, many states exempt employers with fewer than five employees, says Ms. Papke, so find the workers’ compensation official for your state and ask about the specific regulations that apply to your charity. More information can be found at the Workers’ Compensation Service Center.
Additionally, most employers offer short-term disability insurance, although only California, New York, Hawaii, New Jersey, and Rhode Island require employers to do so. And short-term disability coverage is far from universal among nonprofit employers: A 2002 Chronicle survey of 151 nonprofit groups found that only 83 charities offered their workers short-term paid disability leave, although more — 105 respondents — said they cover long-term disability leaves.
Other types of benefits are completely unregulated, so you have options in what to offer employees for life insurance and health-care coverage, she notes. Most organizations offer some form of medical coverage, with smaller numbers also often providing benefits for dental and vision care, she says. Many charities offer some form of retirement plan, usually defined-contribution programs such as 403 (b) ‘s.
Keep in mind, however, that you can provide some benefits with little or no cost to your organization. For example, you can set up flexible spending accounts that allow employees to use pretax dollars from their salaries to pay for out-of-pocket medical and dependent-care costs. Similarly, through municipal commuter-benefit programs, like TransitChek in New York, you can offer your employees the option to set aside $100 per month in pretax earnings to pay for public transportation costs. Credit unions are an example of a benefit that costs nothing for employers to offer their workers.
To find out what other charities are providing to their employees, Ms. Papke suggests contacting nonprofit-management support centers in your area. These groups, found in most major cities, provide training and consulting services to nonprofit groups and should know what benefits are offered by charities of your size. Do a search on the Internet for “nonprofit management” in your city to find help in your area. Ms. Papke also recommends that you consider joining the Association of PVO Financial Managers’ Personnel Co-op, which offers a forum for nonprofit human-resources directors and administrators to share information and discuss personnel issues. The group also publishes an annual salary and benefits survey.
And speaking of benefits surveys, you should contact your state or regional nonprofit association to see if they have done studies of charities in your area so you can get an idea of local standards, says Arlene Vernon, president of the human-resources consulting group HRx, in Eden Prairie, Minn. These groups, she says, can also clue you in to any deals that may exist for charities to pool their benefits-buying power. In addition, some local United Ways conduct benefits surveys and administer packaged benefit plans to charities.
When securing benefits for your group, Ms. Vernon recommends working with a benefits-brokerage firm that can help you create a tailored package.
“You do not pay extra for a brokerage firm to research and select insurance products for you, since they are compensated through the insurance firm,” she says. “You can save considerable time by having someone else do all the legwork for you at no direct cost.” Ask your fellow trustees or other small local charities for recommendations.
Don’t forget about your local Chamber of Commerce — many nonprofit groups join their local chamber to gain benefits, says Tom Sudow, executive director of the Beachwood Chamber of Commerce, in Ohio. By pooling buying power with 112 others in northern Ohio, his group is able to provide its members with low-cost health-care coverage and workers’ compensation, among other benefits. “What small nonprofits need is no different than what small businesses need,” says Mr. Sudow.
For more general background information on benefits and other personnel issues, visit the Society for Human Resource Management’s Web site. Also, skim Philanthropy Careers’ Recruiter’s Primer archive for previous articles on benefits.
