Employee benefits for nonprofit organizations
Learn how nonprofit organizations can increase employee satisfaction and reduce turnover with employee benefits.
Need help designing a benefit that works for your nonprofit organization? Schedule a consultation with a personalized benefits advisor.
Looking to provide benefits to your employees as a nonprofit?
With the cost of healthcare and health insurance rising every year, many nonprofit organizations wonder how they can offer competitive benefits to employees without stretching their tight budgets.
This guide will explain why your nonprofit should offer employee benefits, which benefits are available, and what solutions can help you manage these benefits.
Topics covered in this guide include:
Why offer nonprofit employee benefits?
While employee benefits and perks are beneficial to employees in every sector, there are significant advantages to offering your employees perks as a nonprofit.
Hire and keep top workers
With five generations in the workplace, each with their unique needs, offering a competitive benefits package that works for everyone is crucial. When all of your employees feel supported and appreciated through their benefits, they’re more likely to have high job satisfaction and see your organization as an employer of choice.
In a job seeker’s market, employee retention is vital, especially for nonprofit organizations that have a harder time competing against large corporations with bigger budgets. Offering competitive benefits helps your organization retain employees so that you don’t lose your top workers to for-profit companies.
Satisfy federal and state benefits requirements
The Affordable Care Act (ACA) employer mandate requires organizations, including nonprofits, with 50 or more full-time equivalent employees (FTEs) to provide health insurance that meets minimum essential coverage (MEC).
Other laws require employers with 50 or more employees to provide family and medical leave to employees who have been employed for at least a year. You’ll need to ensure your organization remains compliant with the law while offering benefits your employees value.
Why offer personalized benefits?
While traditional benefits, such as retirement and insurance benefits, are excellent options for any organization, personalized benefits are often a better choice for nonprofit organizations.
Personalized benefits are a type of perk where you provide employees with a monthly allowance through a benefits expense card or account or reimburse them for their eligible expenses.
When you provide a personalized benefit to your employees, you empower them to use their benefits the way they want to. This allows you to best serve their individual needs, giving you a competitive advantage when hiring new talent.
What benefits should nonprofits offer employees?
There are a variety of benefits options available to nonprofits. While most organizations can’t offer all these benefits, consider which benefits are most desirable to your employees and their unique needs.
Traditionally, employees have grown to expect employers to offer group health insurance. But, for nonprofits with tight budgets or small teams, this may not seem possible. Thankfully, there are alternative medical benefits solutions for nonprofits.
A health reimbursement arrangement (HRA) allows employers to reimburse their employees tax-free for medical expenses such as insurance premiums and qualified expenses. With an HRA, employers choose an allowance cap for employees to use each month, giving nonprofits cost control over their benefits.
Three of the most popular types of HRAs are:
- Qualified small employer HRA (QSEHRA)
- Individual coverage HRA (ICHRA)
- Group coverage HRA (GCHRA), also known as an integrated HRA
With an HRA, your employees can get reimbursed for the qualifying medical expenses that matter most to them. QSEHRAs and ICHRAs also enable your workers to purchase the individual health plans that work best for them instead of relying on a one-size-fits-all group policy.
You can also offer your workers a health stipend. This works similar to an HRA, where you can reimburse your employees for medical expenses. However, stipends are taxable and must be reported on your employees’ W-2s.
Due to their taxable status, you can offer employee stipends to independent contractors and international workers. Health stipends may be a better choice for your organization if your employees receive advance premium tax credits (APTC), as they’ll be able to take advantage of their tax credits and their stipend benefit.
Wellness benefits are growing increasingly popular with employees. As a nonprofit, you might wonder how you can afford to introduce a comprehensive wellness program that touches all facets of employee wellbeing. After all, offering your employees gym memberships or fitness club memberships can be expensive.
A wellness stipend allows you to easily offer a wellness benefit without breaking the bank or adding unnecessary complexity to your nonprofit. You can reimburse your employees for their wellness costs with a taxable wellness stipend.
Some of the expenses a wellness stipend can reimburse your employees for include:
- Gym memberships
- Fitness wearables and devices
- Home exercise equipment
- Wellness mobile apps
This gives you complete control over your budget. You can offer any custom allowance amount you’d like for employees to have each month for their benefit to use how they’d like.
Remote work benefits
If your organization has employees who can work remotely, giving them the option to do so can be an excellent perk—especially if you help cover some of their home office costs.
Offering your remote employees a remote work stipend enables them to be successful while working from home. This allows you to reimburse remote workers for their internet access costs, cell phone bills, and home office setup costs. By setting your remote workers up for success, you’ll have a competitive edge in attracting and retaining employees.
Additional benefits to offer
There are endless combinations of perks that can create attractive benefits packages for nonprofit companies. While we’ve covered a few common employee benefits for nonprofits, our list isn’t exhaustive.
Some other benefit ideas for your organization include:
- Life insurance
- Retirement benefits, such as a 401(k)
- Fringe benefits, such as adoption assistance, employee discounts, and meals
- Education benefits, such as tuition assistance or student loan repayment
- Commuter benefits
Many fringe benefits have tax-free status with the IRS as long as your organization adheres to the specific rules for that benefit, making them appealing benefits to offer. You can find the complete list in IRS Publication 15-B.
Ultimately, deciding which benefits to offer your employees should come down to the benefits your employees want and what types of benefits your organization can afford. Creating an employee benefits survey can help you discover which benefits your employees value.
How do you manage employee benefits?
Running a nonprofit organization can be administratively demanding, with many employees wearing multiple hats. With massive amounts of records, regulations, and timelines to stay on top of, adding benefits to these obligations can be daunting.
Many organizations turn to third-party benefits administrators or administration software to easily manage their benefits.
However, offering HRAs and employee stipends through PeopleKeep’s benefits administration software doesn’t add more to a small firm’s burden. Both you and your employees can set up and administer employee benefits in just minutes each month.
Our platform has helped thousands of employers reimburse employees for expenses such as those for health, wellness, and remote work.
Frequently asked questions about nonprofit employee benefits
How are employee benefits different for nonprofits?
Many people have a misconception that nonprofits don’t provide their employees benefits and instead rely on volunteers. This isn’t the case for many nonprofits. Nonprofit employers offer benefits to their employees much like any business would. However, nonprofits tend to have tighter budgets. This makes choosing the right benefits critical.
Does the Affordable Care Act (ACA) require nonprofits to offer benefits?
The ACA’s employer mandate requires all organizations with 50 or more full-time equivalent employees (FTEs) to offer medical coverage. This could be a group health insurance policy or an ICHRA if your employees have individual health insurance that meets minimum essential coverage (MEC).
Nonprofits with fewer than 50 FTEs don’t need to provide benefits by law. However, it is still a great way to attract and retain employees.
Is a nonprofit required to purchase health insurance through the marketplace?
No, nonprofits aren’t required to provide health insurance through the marketplace. However, nonprofits with 50 or more FTEs are required to provide health coverage. This can be through an ICHRA instead of group health insurance, where your employees purchase their own health insurance that meets MEC and get reimbursed for their premiums.
What can be included in my nonprofit employee benefits package?
Your compensation packages can consist of nearly all types of benefits, including health benefits, employee stipends, paid time off, sick leave, retirement plans, and more.
Learn how PeopleKeep can help you
Wondering how you can design an affordable and hassle-free personalized benefits package for your nonprofit organization? Learn how PeopleKeep can make offering individualized benefits possible.