Nonprofit Knowledge Matters | The Compensati​on, Benefits, and Employment Issue

 

View this email in your browser              The common sense of compen$ation When questions about a nonprofit leader’s exceptionally high salary make the front page of the paper, we wince. A single nonprofit is being criticized for being an outlier, but it feels as if all charitable nonprofits and their values are being questioned. At the National Council of Nonprofits we are frequently asked, whether by the media, curious nonprofit staff members, or well-intentioned board members, how to determine what the appropriate compensation is for nonprofit staff.   The answer is, “it depends.” The legal process, promoted by the IRS, is to task the board or convene a group of board members (but not anyone employed by the nonprofit) to compare the salary and benefits of similar positions at similarly-sized organizations in your nonprofit’s geographic area, serving a similar mission. The process should be documented. A written description (such as in the minutes of a meeting) of what data was reviewed, and who was involved in the process, can protect the nonprofit and its board of directors from IRS penalties, in the unlikely situation that the IRS would find that the nonprofit approved compensation that was “excessive.” (Our website resources go into more detail about the process recommended by the IRS.) Of course, nothing can completely insulate a nonprofit from media scrutiny, but following the IRS “comparability” process, and taking pains to document all the research that went into approving compensation levels, offers protection against allegations of unreasonable conduct.   Comparing apples to apples, and proving that you did, is common sense, but it’s often hard to nail down data to use for the comparison. And the more practical question that comes up whenever a nonprofit is attempting to fill a position is: what salary level is attractive to candidates, but simultaneously won’t derail the nonprofit’s budget? Determining the appropriate salary and benefits for staff leaders is time consuming, but taking the time to “get it right” will make the hiring process more efficient and ensure that your nonprofit is attracting and retaining the talent it needs to advance its mission.   Read on for some ideas that may help     How many people work for nonprofits in the United States? Here’s a conundrum: As we often point out, the federal government can tell us how many heads of lettuce were grown in the US in a given year, but not how many heads of people were employed by charitable nonprofits! However, the charitable nonprofit community is a bit closer to having the data we need to show our clout and significance as an economic force in the workplace. According to recently released data from the U.S. Bureau of Labor Statistics (“BLS”) covering years from 2007-2012, there were at least 11.4 million people employed by nonprofits in 2012, which amounts to 10.3 percent of all private sector employment. (The actual number is higher since the data were based only on employer-units that participate in state unemployment programs, and many nonprofits opt-out of government programs, preferring to follow a private insurance route.) This BLS data revealed that of the nonprofit employees identified, their wages amounted to $532 billion, or 9.8 percent of total private sector wages! BLS made this data available in response to repeated requests from the nonprofit community. The BLS is now seeking input from nonprofits on the methodology of the research, the usefulness of the data, suggestions for future data products, and – most importantly – whether it should continue to release this information, so that the public can benefit from it. The National Council of Nonprofits believes this information is vitally important to nonprofits (which is why we have long included this provision in our annual Public Policy Agenda: “… governments have a responsibility to collect and disseminate nonprofit employment and economic data that identify the impact of nonprofit organizations in their jurisdictions”). Please join us by contacting BLS officials to thank the government workers who rolled up their sleeves to make this data available, and tell them how important it is to your nonprofit so they will continue to release this public information that the federal government already collects. If you have questions about the data, or suggestions on how to improve the usefulness of the data, or the process of obtaining datasets, please also let BLS know.     What’s new in health insurance benefits? Nonprofits that utilize the small-employer health credit to help pay for employee health insurance coverage will see a 7.3 percent reduction next year as the result of the automatic, across-the-board spending cuts known as “sequestration” that were enacted in 2011. The shrinking health credit is only one of thousands of arbitrary cuts that can adversely affect the work of charitable nonprofits. According to the IRS, these and other cuts will occur “unless and until a law is enacted that cancels or otherwise impacts the sequester.” In December 2013, House and Senate budget negotiators reached an agreement to avert another round of sequestration cuts, but that deal expires in 2015. White House officials revealed in October 2014 that President Obama will propose sequester relief in his fiscal 2016 budget due to be released in February 2015. That’s a long time to wait! Please help us help you by sharing your story about the small business health care tax credit with us. Thank you!   For information and special access to health and other types of insurance coverage tailored for nonprofits, such as Directors’ and Officers’ insurance, connect with your state association of nonprofits.     Before your nonprofit hires a professional fundraising firm – CAUTION! $1 million+ in penalties was assessed against a Minnesota fundraising solicitation firm that contacted potential donors in South Carolina with “robo” calls, without registering with the state. Did you know that the majority of states require nonprofits to register BEFORE soliciting a single contribution? Your nonprofit is not off the hook for registration if it is not the one making calls to prospective donors directly or sending out direct mail pieces. Moreover, if your nonprofit is directing potential donors to an online portal (such as Paypal or others) that processes donations, your nonprofit may still be required to register in various states. We recommend that you know your state’s charitable solicitation law and are also aware of state laws in other states where your nonprofit is soliciting contributions. Here is a 50-state fundraising compliance guide. (This guide is not legal advice and was created by Harbor Compliance.)   The “lesson learned” is that nonprofits can be responsible for the actions of their employees, and also of independent contractors they hire. As a result, it’s a good idea to set the limits of authority and define responsibilities for independent contractors in a written agreement with them. See our resources about independent contractors.     Q: Where can I find comparability information about salaries and benefits for nonprofits in my area? A: Many state associations of nonprofits offer salary and benefits reports that are state-specific. Related resources are available on our website.   Q: May interns receive a stipend? A.  If you are not careful, that stipend can turn a volunteer intern into an employee who is owed minimum wage. Read about compensation for interns.   Q: We need to downsize a program and thought that one solution would be to make one of our employees a consultant instead. Any risks? A. It will be important to analyze whether the employee you are downsizing truly meets the definition of a consultant, otherwise your nonprofit could face penalties and back wages. Blue Avocado explains this issue.   Top 10 Nonprofit Employment Mistakes  (Siobhan Kelley, J.D, NonProfit Times)   5 steps to help you decide what salary to pay your employees (Small Business Administration)   Who’s an employee and who’s an independent contractor – and why it matters (National Council of Nonprofits)   Your Voices Last month, we asked if your board monitors the impact of public policies on mission delivery and resources? Here's what you said:       New Resources from the National Council of Nonprofits What does it cost to deliver a nonprofit’s mission? #OwnYourOwnCosts   Worth Reading Two words that change how people think of you: “Thank you” With thanks – Gratitude can win you new friends. (UNSW Australia)   The Paradox of Generosity (Smith and Davidson, Oxford University Press 2014)   Overcoming the nonprofit starvation cycle – A conversation with Ann Goggins Gregory, interviewed by Nell Edgington (Social Velocity blog)   The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions By Steve Zimmerman and Jeanne Bell (Jossey-Bass 2014)     Share this newsletter with your staff, board, and nonprofit colleagues         Did you receive this email from a friend? Sign up now to receive this free e-newsletter each month. © Copyright 2014 National Council of Nonprofits. All rights reserved  1200 New York Avenue, NW | Suite 700 | Washington, DC 20005 | www.councilofnonprofits.org

 

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Forum of Regional Associations of Grantmakers and Foundation Center Form Strategic Alliance

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FOR IMMEDIATE RELEASE CONTACT:
Cheryl Loe Communications Project Manager Foundation Center (888) 356-0354 ext. 701 communications@ foundationcenter.org	Dan Brady Communications Manager Forum of Regional Associations of Grantmakers (888) 391-3235 dbrady@givingforum.org
Forum of Regional Associations of Grantmakers and Foundation Center Form Strategic Alliance Nationwide Partnership Will Expand Access to Data on Philanthropy, Improve Foundation Effectiveness New York, NY — October 6, 2014. Washington, DC-based Forum of Regional Associations of Grantmakers and New York-based Foundation Center have announced a new partnership to improve the quality and effectiveness of grantmaking through the strategic collection and sharing of data on philanthropy. The Forum is a national network of 34 geographically organized philanthropic associations that together have a membership of more than 5,500 participating organizations, making it the largest network in American philanthropy. Foundation Center is an independent nonprofit that is known as the leading source of information about philanthropy worldwide. "The philanthropic sector talks increasingly about such things as field alignment, strategic collaboration, and leveraging core competencies," said Bradford K. Smith, president of Foundation Center. "This partnership is a golden opportunity to put those principles into action." The Forum's mission is to leverage the collective knowledge of its association members so that each can be the highest quality provider of philanthropic support services in their regions, while a Foundation Center priority is to empower donors with the knowledge tools they need to be strategic. The partnership will tap the unique strengths of each organization in order to achieve shared goals. "The Forum Network has both deep regional roots and a broad national reach, and our regional associations' members are key to strengthening connections and knowledge sharing across the giving sector. However, at present, only a handful of our associations has access to up-to-date grantmaking data on their membership, and none have sophisticated online tools that allow the data to be queried and explored in real time," said Michael Litz, president and CEO of the Forum of Regional Associations of Grantmakers. "Opening these new resources to the Forum Network will be a game-changer for those striving to be more strategic and impactful in their philanthropy." The partnership will entail establishing platforms and systems for collecting data contributed by Forum members and translating it into knowledge services that will benefit not only the Forum membership, but the broader philanthropic sector. Specific plans include the following: Philanthropy Data: To support a vibrant and effective philanthropic sector, the partnership will launch a "donor data campaign" to encourage members of regional associations to centralize and standardize giving data at Foundation Center. This current data will be accessible to all members through an interactive mapping platform helping to inform funding decisions and track trends in each region. Philanthropy Research: Templates for research reports will be created so that information about regional giving can be more easily and efficiently published and shared, providing regionally focused funders with critical information about funding patterns in their communities. Philanthropy Tools: Data visualization, benchmarking, and knowledge management tools will provide regional associations with continuous access to comprehensive data on the work of their member foundations and empower users to draw actionable conclusions from the information. In recent years, Foundation Center and individual Forum member associations have partnered on a wide variety of projects, including more than 40 research reports and fact sheets, and Forum members have participated in Foundation Center's Funding Information Network. This partnership is a natural evolution of those preceding collaborations, all of which have in common the goal of spreading knowledge to strengthen philanthropy and the good it can achieve. The national scope of the partnership, however, will introduce efficiencies and broaden its impact. "Recent advances in information technology have put us in a position to collect and share knowledge far more efficiently than ever before," said Lisa Philp, vice president for strategic philanthropy at Foundation Center. "When this system for data gathering, sharing, and visualization is applied across an entire network of grantmakers, the opportunities for donors to collaborate and achieve their visions of a better world will multiply exponentially." ### Share on Twitter: Strategic alliance btwn @givingforum and @fdncenter will improve quality and effectiveness of grantmaking. bit.ly/FCforum14 About Foundation Center Established in 1956, Foundation Center is the leading source of information about philanthropy worldwide. Through data, analysis, and training, it connects people who want to change the world to the resources they need to succeed. Foundation Center maintains the most comprehensive database on U.S. and, increasingly, global grantmakers and their grants — a robust, accessible knowledge bank for the sector. It also operates research, education, and training programs designed to advance knowledge of philanthropy at every level. Thousands of people visit Foundation Center's website each day and are served in its five regional library/learning centers and its network of more than 470 funding information centers located in public libraries, community foundations, and educational institutions nationwide and around the world. For more information, please visit foundationcenter.org or call(212) 620-4230. About the Forum of Regional Association of Grantmakers Established in 1998, the Forum of Regional Associations of Grantmakers is a national philanthropic leader and network of 34 regional associations of grantmakers with a combined membership of more than 5,500 participating organizations. The Forum facilitates effective philanthropy by fueling connections and knowledge sharing across the giving sector, delivering efficiencies and cost savings for our 34 member associations, and providing tools and resources to advance policy change. For more information, please visit givingforum.org or call (888) 391-3235. View Press Releases Foundation Center • 79 Fifth Avenue, New York, NY 10003 • (212) 620-4230