It's always exciting getting introduced to new non-profits and helping them to support their mission-driven work by way of outsourced or fractional HR support. We love the unique cultures that non-profits tend to generate with aligned organizational values, the focus on the cause and impact they are making, and the creativity when operating with tighter budgets.
That said, some aspects of HR for nonprofits can be challenging. Let’s take a look at some of the most common HR challenges in not-for-profit organizations.
Biggest risks in HR for Nonprofits
When it comes to HR compliance, being a nonprofit doesn’t give you any special exemptions. Anyone who employs people is an employer, which means they must comply with laws like FMLA, FLSA, and OSHA guidelines. And some of our nonprofit clients are surprised to learn that if they receive government funding, they are subject to federally mandated regulations that are quite similar to government contractors.
Of course, HR is more than just compliance. Human Resources is also about helping your team to be at their best. Good HR function leads to a great team, and a great team will help you to serve the community or cause you represent.
Without the right HR services, nonprofits can run into challenges. Some of the most common problems include:
1. Lack of HR experience
Nonprofits have a duty to keep overheads low. This often means running with a small back office team, with people trying their best to fill any skills gaps. For example, the finance officer might take responsibility for overseeing payroll.
The problem is that many HR tasks require specialist knowledge of tasks such as benefits administration, payroll processing and performance management. Without a qualified HR professional on the team, you run the risk of breaching compliance, with could leave you open to fines and lawsuits. You may also have trouble managing employee relations, which could cause your best team members to leave.
2. Employee classification
Nonprofits often have a team of volunteers that help out with essential duties—for example, animal rescue charities might have a team of volunteer dog walkers. But what happens when an employee offers to walk the dogs?
Employee classification raises a number of issues you’ll need to think about, such as:
- Employees: Employees must be paid for time worked, and this has to meet local rules regarding minimum wage and leave entitlements.
- Volunteers: Your employees cannot volunteer their time to the organization, even if they choose to do so.
- Contractors: You may use a contractor to perform certain tasks, but if they work a regular schedule, they may need to be classified as employees.
Getting this wrong can lead to serious consequences—and you may be personally liable.
3. Compliance and reporting
Employers are governed by a complex framework of local, state, and federal laws. It's up to you to make sense of those laws and ensure that you're compliant. If you make any mistakes, you could be liable for fines, or your employees could sue.
You also have to prove that you're in compliance by having the right paperwork. This is where an HR consultant is invaluable—they know what to record, what to keep on record, and what to file with the authorities. If you have an accurate HR paper trail, you're much less likely to experience trouble.
4. Recruitment and onboarding
Ready to add a new team member? You’ll have to compete with all of the other employers out there, including large companies that offer attractive salaries. Navigating the recruitment market requires a great deal of expertise and HR knowledge.
Once you’ve found the right candidate, you’ll need to make a competitive Total Rewards offer to secure their services. As many as 93% of new hires think of quitting in the first 3 months after hiring. You’ll also need an excellent onboarding process to make sure your new hires stick around, thereby improving retention.
5. Culture and engagement
HR is all about creating an environment for success. If you have an HR team, they’ll work hard to help you develop a healthy internal culture that supports your team and keeps everyone focused on the mission.
HR professionals also work on creating an outstanding employee experience. A thriving culture and an exceptional employee experience will help your team to be at their best. This means more engagement and better results for your important mission.
Why outsourcing HR is ideal for nonprofit organizations
Is it better to hire a full-time HR expert or outsource to an HR consultant?
There are pros and cons to both approaches. Permanent HR staff will offer stability and continuity, and help guide your organizational culture over time. But an HR consultant has the advantage of a quick start with no recruitment process. There are other advantages too, such as:
- Easy to adapt to your needs: HR consultants offer varying service levels, ranging from day-to-day admin tasks to high-level HR strategy planning.
- Clear value for money: When you're signing up with an HR consultant, you can establish clear goals for the term of their contract. This helps you ensure that you're getting an adequate return on your investment.
- Greater transparency and accountability: In a nonprofit, all expenditure decisions have to pass through the management board. It's easier to justify your spending if you have a clear contract that shows both deliverables and pricing.
- Access to expert knowledge: HR consultants work with a range of different companies, so they have in-the-field experience in HR compliance. They also know about best practices, plus they have keen insight into the recruitment market.
- Consultants who share your values: You can shop around for an HR outsourcing partner that suits your requirements. As part of the search, you can talk to people about your mission and values, and look for someone who is aligned with your goals.
In larger organizations, you might use a blended approach, with your in-house teams supported by an expert consultant in HR for nonprofits. This is the best thing about outsourcing—you can find a flexible solution that works for you.
Need help with HR for nonprofits?
Nonprofit HR often means doing less with more. You have to work within tight constraints but also create a positive employee experience for your team.
If you're looking for a partner that can help streamline your HR processes and support your initiatives, then talk to Helios HR today. For over 20 years, we have helped organizations in the nonprofit sector to achieve their visions and serve their communities.
Book a no-obligation consultation call with Helios HR today.
