Nonprofit organizations focus on a specific cause or mission. From animal related charities to educational institutions, nonprofit organizations have a broad spectrum of goals. Using excess funds to further the goals is the nature of the nonprofit organizational structure. As a result, handling employment and compensation issues tends to be a difficult task.
Staying compliant with workforce laws is critical. Finding the balance between the nonprofit’s performance and the legalities of the labor may require the use of a highly reputable CPA or tax firm.
4 Ways to Tackle Employment and Compensation Issues
Along with regular businesses and corporations, employment and compensation issues can create a strain on a nonprofit organization.
1. Budget Constraints
A nonprofit organization receives funds from the public, governmental grants, and other forms of donations. Creating budget constraints, the number of funds collected may vary from year to year. Hiring and keeping employees with an unreliable budget is difficult. Consider using a reliable yearly grant or donation amount for employees’ compensation.
2. Compensation and Benefits
Paying employees minimum wage and overtime in compliance with federal regulation may seem ideal on paper. After taxes and other state and federal requirements, a 40 hour a week pay check may not be attractive to employees. Receiving low weekly paychecks creates a high turnover rate among the nonprofit employees. The high turnover rate requires new employees to be hired and trained. Orienting a new employee costs time and money.
Hiring employees in under salary pay, not minimum wage, is often an effective solution. Discussing the compensation, benefits, and health care regulations with your nonprofit’s CPA is a priority. Failing to following regulations and employment laws may result in costly fines.
3. Employee Burn Out
Many employees work for a nonprofit organization for personal reasons. The cause of the nonprofit organization’s background allows the employee to feel the work is worth while. Due to the fact some employees feel a sense of accomplishment for working for an organization with a specific set of values, lower pay is often acceptable. The employees who love the cause of the nonprofit are the ones to value.
Working the good, quality employees in excess may create the burn out effect. In the end, the result may be the employee looking elsewhere for employment. An owner or manager of a nonprofit organization must learn to value employees’ time, health and over all well-being.
4. Rely on Your Volunteers
Using volunteers to help in the daily operations of your nonprofit is a cost savings measure. In order to keep volunteers, consider adopting a training program. Volunteers who fail to help in an effective manner may actually create more problems than solutions. Remember volunteers are donating their time. Using praise and being thankful for services helps keep volunteers from looking for other nonprofits to donate time.
Every form of business must examine employment and compensation issues. Finding an effective solution to work for you may take time and practice. The staff at Ernst Wintter & Associates are available to assist your non-profit with employment and compensation issues, among other things. Contact us today to schedule an appointment with one of our CPAs.