Leadership, Total Rewards

Helping Nonprofits Help Others

/ February 13, 2020 February 13, 2020


I was recently asked to elaborate on my view of the critical benefits challenges facing health and social service organizations today.  As I started to think back on my consulting experience with our nonprofit customers, sadly, it dawned on me how simple it was to answer this question.  Although there are numerous challenges, the heart of the issue boils down to one thing – the continual uncertainty in funding and revenue streams.  In fact, this is not only the most critical benefits challenge facing health and social service organizations today, it is the biggest threat that our nonprofit customers face in attracting and retaining top talent across the board.

As referenced in the following Inc. article, Bruce Hopkins identifies the competition for talent between nonprofit and for profit organizations in his Legal Guide to Starting and Managing a Nonprofit Organization stating Because these individuals are not likely to want to be ‘nonprofit’ employees, nonprofit and for-profit organizations compete for the same pool of talented persons. This competition extends not only to salaries but also to benefits and retirement programs.”

With that said, how can a social service nonprofit with the continual threat of decreased funding possibly compete?  From a benefits perspective, it starts by having a trusted partner.  The organization must have or find a subject matter expert with experience in the industry that they can trust.  They also need to be open and honest about funding challenges.  They need to be transparent and willing to share the impact of the fluctuation in revenue on their ability to create attractive benefit programs.  In return, the selected partner should make it a priority to truly understand the financial constraints of the organization and use their expertise to help create a needs based strategy.

For example, consider the topic of alternative funding for medical plans.  After the adoption of the ACA and the recent focus on wellness and transparency, the number of organizations considering alternative funding for their benefit programs, such as level funding, captives, consortiums, and self-funding is at an all-time high.  However, in order to truly evaluate these options, it is important to look at more than just the bottom line.  While many of these alternatives can be a great fit for an organization, careful thought should be given to all aspects of the change.  How will payment to the carriers/vendors work? Will payment fluctuate week to week or month to month?  Who floats payment in the event of a large claim until the carrier reimburses?  What is the fiduciary responsibility with regards to employee contributions?  What additional plan administration will be necessary?  Will additional headcount be needed to support this effort?  What new fees or reporting requirements will apply?

These are just some examples of the questions that need to be considered during the decision making process, but it drives the point home.  Without a seasoned and trusted partner willing to understand the intricacies of the organization, nonprofits will continue to be challenged to create a benefits package that can compete with that of it’s for-profit rival.

Are you a nonprofit organization plagued with these benefit challenges? Contact us today. At Exude, we serve as your trusted advisor, working with a mandate to act in a proactive partnership with your people.