Carrots or Karats: Rethinking Benefits for Nonprofit Employees
Benefits are a key factor when job seekers evaluate job opportunities. Even though budget constraints often dictate a ceiling on nonprofit salaries, a competitive and robust benefits package can be an effective way to attract talent and retain employees. This article highlights some misconceptions about benefits and suggests a few ways that organizations can rethink the benefits they extend to their employees.
#1: Skip the matching and make retirement planning possible.
Offering a retirement plan like a 403b can be expensive for some nonprofit organizations; however, they may not be as cost prohibitive as one might imagine. In general, retirement plans become expensive when employers agree to match contributions made by employers. If an employee agrees to match up to five percent of an employee’s base salary for every employee, annual costs even for a small organization could sail high into five to six digits annually for the organization.
However, it may be surprising to learn that for under $200/month an organization can offer a retirement savings plan to employees if contributions are not matched. If an employer does not match contributions, it is only responsible to pay the administrative fees charged by the benefits company used by the nonprofit organization. To scale retirement plans over time, organizations have a few options. For example, if an organization winds up in the black at the end of the year, this profit can be distributed to employees in the form of an end of the year bonus that can be added to an employee’s retirement fund.
Tip #2: Consider the cafeteria plan
A Cafeteria Plan is outlined in Section 125 of the IRS Tax Code. Offering a Cafeteria Plan provides a level of decision making to each employee and it communicates to your staff that you value exactly what each member values. Typically, managing these plans require diligent administration to ensure that the Cafeteria Plan is in compliance with IRS guidelines. If your organization is already employing a benefits administrator, he/she will be able to manage the plan. PayChex is a benefits administrator that offers affordable benefit plans including Cafeteria options.
Tip #3: Get flexible!
Flexible Spending Accounts (FSA) allow employees to set aside a portion of their paycheck for qualified expenses. Qualified expenses can come in the form of expenses associated with medical care and dependent care. Money that is deducted from a participating employee’s paycheck and placed into an FSA is not subject to payroll taxes. This can be a valuable benefit to your employees because of the payroll tax savings. The other good news about FSAs is that nearly every medical and childcare cost is qualified. Common expenses like Vaseline, contact solution, co-pays at the doctor’s office, daycare fees, diapers, aspirin and gym fees can be deducted from an employee’s payroll thus reducing their taxable income.
Tip #5: Get creative!
If your organization is unable to offer these types of financial benefits for your employees, do not despair. Thinking a bit outside the box can offer yield some benefits that your employees will really appreciate.
Start by reflecting on your culture. How do you reward hard work or success? Would you allow an employee to work from home for a day as a reward for some noticeable hard work? Do you throw parties to celebrate organizational milestones? Do you recognize birthdays? These may sound like trite questions, but demonstrating that you pay attention to and reward hard work in creative ways can show an employee that management really appreciates their contributions.
Learn about what makes your employees tick. A common strand in many nonprofit jobseekers is that they are motivated by doing good for the public. However, they might not get the chance to exercise their unique brand of social justice during the 9-5 or they might be too burnt out to volunteers as much as they would like. Why not add on a few days off for volunteering into your vacation package. This might allow an employee to play the role of a scout leader for an extended weekend camping trip or encourage the former College Democrat to drive seniors to the polls on Election Day without spending his/her well deserved vacation days.
If you are a nonprofit organization in a city, you are literally surrounded by opportunities for your staff members to spend their hard earned salary. Hit the streets and talk to the management of local gyms, restaurants, movie theaters, parking garages and coffee shops and see if you can work out discount prices for your employees. Kiva, a nonprofit in San Francisco that promotes micro-finance investments in developing countries, touts 50% off at the sushi restaurant in its benefits package. Similarly, the EF Foundation in Boston offers discounted Celtics and Bruin tickets to its employees due to its close proximity to the teams’ arena.
Tip #6: Revisit time-off and work arrangement policies.
In a recent study by Commongood Careeers, The Voice of Nonprofit Talent in 2008, nonprofit jobseekers ranked benefits such as “vacation policies” and “flexible work plans such as 4-day work weeks and working from home” as the most important non-salary benefits. There factors ranked far above traditional benefits such as dental, vision, performance bonuses, tuition debt support and family leave.
There are a number of low-to-no cost ways to implement alternative time-off and work arrangement benefits. Pick 2-3 non-holiday Fridays and declare them organizational holidays. Offer unpaid summer vacations to those who want it and who you can afford to have out for a few months. Encourage employees to utilize flex-time, the option to work less than 40-hour weeks, or work part-time from home. Invest in your management capacity to maintain performance levels within an increasingly flexible office.
Tip #7: Collaborate with your employees on what they want.
Do you use “collaborative” anywhere in your literature, web site or job descriptions to describe your organization’s culture? If so, practice what you preach and bring the staff to the conference table to discuss benefits. If all are involved in the discussion it will be clear to your employees that you are serious about providing benefits and that you want to do what is best for each individual. If you fail to communicate with your team on benefits a negative sentiment that you are just too poor or too cheap might brew. These feelings of organizational uncertainty can lead a good employee to dust off his/her resume and consider new opportunities. If benefits that employees want are too out of reach, be honest about it and work through alternatives. Being open about goals and concerns can be a benefit in itself.
There are a number of online resources available that have more tips that might help you rethink benefits for employees. Web sites such as www.irs.gov and www.commonwealthconnector.com offer good places to start. Paychex also has great information on flexible benefits packages. Considering these tips and offering creative and flexible benefits will communicate to your employees that you are concerned with the aspects of their lives that occur beyond the office while keeping your organization competitive to active job seekers.
This article was written by Commongood Careers and is published under a Creative Commons Attribution-NonCommerical-NoDerivs 2.5 License.
For more information about nonprofit and socially entrepreneurial careers, visit Commongood Careers at http://www.cgcareers.org.