Running a nonprofit is a challenging task. As a nonprofit leader, you must ensure your organization is fulfilling its mission, secure the funding to do so, and invest resources judiciously amid ever-rising costs. To fulfill your mission effectively, you also must attract and retain talent, manage your facilities, engage audiences, and comply with all applicable regulations. And if your organization is like most nonprofits — small and community-based with an annual budget of less than $1 million — you know firsthand just how demanding this work can be.
HR is an essential component of any organization. HR not only helps you bring the best and brightest to your nonprofit, but it also manages the core functions necessary to keep them there, such as payroll and benefits administration. Yet, like many nonprofit leaders, you may be constrained by a lack of experienced staff or budgetary considerations or else face complex liability issues that force you to manage HR more than fulfill your organizational mission.
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Human Resources Shortfalls
Nonprofit HR departments often lack either enough staff, the right staff, or both. Staffing shortfalls may occur if a founder or management team misjudges organizational HR needs or does not have the funding to acquire them. Some small nonprofits may lack an HR department entirely, with HR duties split between multiple staffers or held by one staffer who also has additional responsibilities. In either case, these staff members do not develop the necessary expertise to handle many common issues, much less complex ones.
HR is, after all, more complex than just making sure that open positions are filled. Every day, HR staff must help your nonprofit comply with:
- Employee benefits laws, including the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Health Insurance Portability and Accountability Act (HIPAA);
- Immigration laws, such as the Immigration and Nationality Act (INA)
- Wage and Hour Laws, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA)
- Workplace discrimination laws, including the Americans with Disabilities Act (ADA), Age Discrimination in Employment Act (ADEA), Equal Pay Act (EPA), Pregnancy Discrimination Act (PDA)
Further, nonprofit HR departments must also navigate the maze of state and local laws and regulations in these areas and your organization’s internal policies. Ensuring compliance takes even experienced staff considerable time and effort.
HR is about more than just compliance with rules. Effective HR departments help leaders convey workplace values and promote organizational culture. Whether through well-crafted staff policies, communication, or training, experienced and effective HR personnel help you set the tone for your organization.
Budgetary Constraints
Staffing isn’t the only HR component that suffers when you don’t have enough cash on hand. When you’re operating on a barebones budget, often items like staff luncheons seem like luxuries. But they shouldn’t be. Employees are motivated not only by the salary and benefits you offer but also by the meaningfulness they find in their job. If your employees must work long hours or are paid less than they might be elsewhere, that meaningfulness may provide them enough satisfaction to overlook these things.
However, when you underinvest in human resources, employees may feel less appreciated and become less engaged over time. For example, failing to recognize overperforming employees may lead them (and others) to gradually become less productive. An absence of regular training opportunities may cause your employees to question your commitment to them. Routine HR tasks may slip through the cracks and have employees question your ability to lead.
Because many core HR tasks can be automated does not mean you should reduce HR to just payroll and benefits. HR’s many other functions play a critical role in the success of your entire organization. Experienced HR staff can help you identify and automate the right processes to save you money and time — resources you can and should reinvest in other critical HR functions.
Complex Liability Issues
By failing to focus on more complex HR issues, you could be leaving yourself open to legal liability. For example, you may have received notification from the U.S. Customs and Immigration Service that you’ve been scheduled for an I-9 audit in a few weeks, and your I-9 documentation may be incomplete. Or an unsuccessful job candidate may claim your interview process was biased and be threatening to sue. Perhaps you’ve only recently realized that there are, in fact, laws regulating the use of volunteers and interns, and you’re unsure whether you’re in compliance.
HR work not only helps shield companies from legal issues but reputational issues as well. Perhaps you need to outsource some work but need to find contractors aligned with your company’s mission and values. Or you may discover disparities in your pay and benefits packages that disproportionately benefit one group over another, and you need to standardize them before that fact hits social media.
These are just a few examples of common challenges HR professionals face that can have an outsized impact on the entire organization. It takes experienced and knowledgeable professionals to help you navigate them.
How PEOs Help Nonprofits Manage HR
Let’s face it. You started working at or founded your nonprofit to help it achieve its mission, not manage complex compliance tasks. Chances are you’ve found yourself involved with esoteric HR work far more than you’d like to be. Here’s where a Professional Employer Organization (PEO) can help.
A PEO provides a comprehensive suite of HR services to small and medium-sized businesses (SMBs) and nonprofits like yours. By pooling the employees from multiple nonprofits and SMBs, PEOs can acquire health insurance plans and workers’ compensation coverage at significantly reduced rates, saving your nonprofit money and providing your employees better benefits in the process. Further, by working with multiple employers solely on HR issues, a PEO can offer you a depth and breadth of HR compliance expertise that’s hard to match.
What if you have existing HR staff? A PEO works with your staff and helps broaden the range of HR issues you can now tackle. If you have one dedicated HR rep, that rep no longer has to handle every HR task and keep up to date with an ever-changing legal and regulatory landscape. Now you have access to an experienced HR team dedicated to keeping on top of your organizational issues and the broader labor landscape.
However, the best PEOs for nonprofits handle more than just benefits and compliance issues. Their team builds a relationship with you and your team to help you manage every facet of HR from professional development opportunities to conflict resolution that’s aligned with your expectations, organizational values, and culture. This way, you can spend more time and money on your nonprofit’s mission while retaining control of your organization.
It takes experienced HR staff to handle today’s human resources needs. A PEO can help you manage not only your payroll, benefits administration, and compliance issues. PEOs can help you manage your HR work in a time-efficient and cost-efficient manner so that you can focus your attention, effort, and resources where they belong: on achieving the mission of your nonprofit. If you’d like to learn more about how PEOs can help nonprofits like yours, check out our blog.
