5 Things You Never Knew About Nonprofit Human Resources

When you think of human resources (HR), you probably think of their typical role as a business unit, enforcing organizational policies and handling employee complaints. You might not realize that HR entails so much more—and that nonprofits need an HR function, too.

Many people think that nonprofits don’t need HR, assuming they’re exempt from local, state, and federal employment regulations, or that nonprofits with HR roles implement them exactly the same way for-profit companies do. We’re here to set the record straight on nonprofit HR so you can effectively use this function to recruit top talent, create a fulfilling work environment, and keep your employees productive and engaged.
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1. Nonprofits face several HR challenges due to limited resources

It’s no secret that nonprofits have limited budgets. Without the resources of for-profits, many nonprofits find it difficult to devote enough time, money and energy to HR tasks. As a result, these organizations may not meet their employees’ needs and risk failing to comply with employment regulations.

Additionally, having fewer resources makes it harder for nonprofits to be competitive in the hiring space. Since nonprofits can’t always provide generous salaries the way for-profit businesses can, they have to be creative with how they approach compensation and communicate these details. A dedicated nonprofit HR team must develop a compensation plan that attracts prospective employees and encourages them to apply.
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2. A strong HR strategy helps nonprofits offer competitive compensation

As mentioned in the previous section, nonprofits must rely on the HR function to create competitive compensation plans that make up for their lack of monetary resources. Astron Solutions’ employee compensation guide recommends that organizations take a total rewards compensation approach, a holistic strategy that encompasses both direct and indirect compensation.

As such, your plan should include the following elements:

• Direct compensation. When you think of compensation, you likely think of direct compensation, or the financial ways you reward team members for their time and effort. Direct compensation encompasses salary, hourly pay, incentive pay, bonuses and overtime pay.
• Indirect compensation. To make up for their lack of monetary resources, nonprofits can offer robust indirect compensation, which refers to the ways you can give back to employees without paying them directly. Examples of indirect compensation include health insurance, paid time off (PTO), retirement plans, diversity, equity, and inclusion (DEI) plans, employee recognition, wellness programs and other benefits like vehicle reimbursement.

When you take a total rewards approach, you can ensure your compensation packages are affordable for your organization while still benefiting multiple areas of employees’ lives. Plus, you can shape your indirect compensation plans to fit your nonprofit’s specific internal culture and employee needs.For example, if your organization values togetherness and forming relationships between coworkers, you may offer monthly team happy hours. On the other hand, a nonprofit that emphasizes taking the time to recharge may provide extensive PTO, wellness benefits and a flexible work schedule that allows employees to work remotely.
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3. Volunteer management is part of HR

Particularly for small and mid-sized organizations that may not have the resources to fill a role specifically for volunteer management, this area is part of your HR function. Since volunteers are crucial to your work, you need a strong volunteer management strategy that enables you to recruit and retain loyal, hard-working individuals.

Double the Donation’s volunteer management guide explains that you should follow these steps to optimize your volunteer management strategy:

1. Recruit volunteers. Your HR team will oversee sourcing volunteers and introducing them to your program. Make their job easier by creating a page on your website that explains the volunteer opportunities you offer, any associated skills and time commitments required or preferred and how prospective volunteers can get involved.
2. Communicate with them effectively. Your HR team will establish relationships with new volunteers by keeping them informed of any upcoming opportunities, program updates or chances to maximize their support, like volunteer grants.
3. Prepare them for success. Ensure volunteers are ready to perform their tasks by providing proper training and resources. That way, your HR team can answer questions preemptively and make volunteer activities go more smoothly.
4. Collect data. Learning more about your volunteers’ skills and interests allows you to match them with appropriate opportunities and maximize their effectiveness. Equip your HR team with a volunteer management solution to store this information.
5. Show appreciation. Lastly, demonstrate your gratitude for your volunteers’ hard work and dedication to your cause. Your HR team may thank volunteers via thank-you notes, social media shoutouts, phone calls or appreciation events.

Keep your volunteers engaged with a comprehensive volunteer management strategy. To personalize your approach to your specific volunteer base, have your HR team send them surveys to gauge their engagement levels and ask for program feedback.
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4. An HR function can help nonprofits handle compliance and documentation

Contrary to popular belief, nonprofits are not exempt from employment regulations. Any organization that hires employees or uses independent contractors must follow all applicable local, state, and federal employment regulations—even 501(c)(3) organizations.

Your HR team can help ensure your nonprofit complies with these laws and policies, including:

• Anti-discrimination regulations
• Fair Labor Standards Act
• Family and Medical Leave Act
• Social security policies
• Occupational Safety and Health Administration (OSHA) requirements
• Pay transparency laws
• Mileage reimbursement rules

In addition to employment regulations, your nonprofit must also handle your nonprofit’s taxes by filing Form 990 each year to stay compliant with the Internal Revenue Service (IRS). Your HR team can support your finance team by providing some of the information needed for the form, like details on executive compensation.
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5. Many nonprofits can benefit from working with an HR consultant

As we’ve seen, nonprofit HR covers several areas and comes with its own unique challenges. While you can attempt to manage your HR team on your own, many nonprofits prefer to partner with a nonprofit human resources consultant to support them with this process.

A nonprofit HR consulting firm can help your organization with a variety of different HR responsibilities by:

• Evaluating your existing HR policies
• Developing an employee retention strategy
• Providing compensation consulting services
• Creating incentive and recognition programs
• Helping you communicate with employees more effectively
• Guiding you through performance management

Before you begin the hiring process, take the time to determine exactly what your team needs in an HR consultant. Then, start researching your options to find the best fit for your organization.

Human resources can be an elusive concept, but nonprofits need to know exactly what it entails and the challenges they may face so they can build strong, effective HR teams. With your nonprofit HR misconceptions cleared up, you can now embark on a journey of assembling an HR team that will help you recruit, manage and engage your employees and volunteers.