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Rethinking Benefits for Nonprofit Employees

Benefits are a key factor when jobseekers evaluate potential opportunities. Even though budget constraints often dictate a ceiling on nonprofit salaries, a competitive and robust benefits package can be an effective way to attract talent and retain employees. This article highlights a few ways that organizations can rethink the benefits they extend to their employees, especially during difficult economic times.

Engage Staff as Stakeholders

Start by engaging your employees in the decision-making process. A great way to arrive at a benefits package that will be most valued by your employees is to bring them into the discussion about benefits. Involving them in these conversations makes it clear that you are serious about providing the best possible benefits while also balancing the organization’s available resources. If benefits that employees want are too far out of reach, be honest about it and work through alternatives. Being open about goals and concerns can be a benefit in itself.

Get Creative

If your organization is unable to offer robust financial benefits for your employees, thinking “outside the box” can often yield some benefits that your employees will appreciate.

Start by reflecting on your culture. How do you reward hard work or success? Would you allow an employee to work from home for a day as a reward for an accomplishment? Do you throw parties to celebrate organizational milestones? Do you recognize birthdays? These may sound like trivial questions, but all forms of compensation (including benefits) are often as much about showing respect as they are about providing dollars and cents. Finding non-cash means of showing that you pay attention to employees and reward hard work can demonstrate to your team that you really appreciate their contributions.

A common trait among many nonprofit professionals is that they are motivated by “doing good.” However, they might not get the chance to exercise their unique brand of social justice during the traditional work day or they might be too burnt out to volunteer as much as they would like. Why not add on a few days off for volunteering into your vacation package? This might allow an employee to play the role of a scout leader for an extended weekend camping trip or encourage a former political activist to drive seniors to the polls on Election Day without producing a direct cost to the organization or having those employees utilize their other vacation days.

If you are a nonprofit in a city, you are literally surrounded by opportunities for your staff members to spend their hard earned salary. Hit the streets and talk to the management of local gyms, restaurants, movie theaters, parking garages and coffee shops and see if you can work out discount prices for your employees. Kiva, a nonprofit in San Francisco that promotes micro-finance investments in developing countries, touts 50 percent off at the local sushi restaurant in its benefits package. As another example, the EF Foundation in Boston offers discounted Celtics and Bruins tickets to its employees due to its close proximity to the teams’ arena.

Revisit Time-Off and Work Arrangement Policies

In a recent study conducted by Commongood Careers, The Voice of Nonprofit Talent in 2008, nonprofit jobseekers ranked benefits such as “vacation policies” and “flexible work plans such as 4-day work weeks and working from home” as the most important non-salary benefits available. These factors ranked above traditional benefits such as dental, vision, performance bonuses, student debt repayment and family care. There are a variety of factors driving these trends, but test these kinds of ideas with your own employees to see what they value.

There are a number of low-to-no-cost ways to implient alternative time-off benefits. For example, choose two or three organizationally significant, non-holiday Fridays and declare them “our holidays” (in addition to federal holidays). Offer unpaid summer vacations to those who want it and who you can afford to have out for a few months. Encourage employees to utilize flex-time, work part-time from home, or work less than 40-hour weeks for less than full-time pay. If you are going to pursue such strategies, however, invest in your management’s capacity to maintain performance levels within an increasingly flexible office environment.

Skip Matching to Make Retirement Planning Possible

Offering a retirement plan like a 403(b) can be expensive for some nonprofits, although they may not be as cost prohibitive as one might imagine. In general, retirement plans become expensive when employers agree to match contributions made by employees. If an employer agrees to match up to five percent of every employee’s base salary, annual costs even for a small organization could sail high into five or six digits annually for an average sized organization.

There is, however, generally no requirement to match contributed funds in order to set-up a retirement savings plan for your employees. If your organization does not currently have a 403(b) or 401(k), it may be surprising to learn that you can establish and maintain such a plan for just a few hundred dollars a month in administrative fees paid to a benefits management company.

The important thing is to help your employees start saving in the immediate term. Matching funds can always be added at a later date. As an alternative to matching contributions an organization can plan to distribute year-end bonuses to employees in their retirement accounts dependent on whether or not the organization is in the black at the end of the year.

Get Flexible

A Flexible Spending Account (FSA) allows employees to set aside a portion of their paycheck on a pre-tax basis for qualified expenses. Qualified expenses are associated with medical care and dependent care, and generally include items such as over-the-counter drugs, prescription co-pays, contact solution, doctor’s office co-pays, daycare fees, diapers, and gym fees.

Because money that is deducted from a participating employee’s paycheck and placed into an FSA is not subject to payroll taxes, that is extra money (often around $300 out of every $1,000 apportioned) that you are helping to place directly into an employee’s pocket that would have otherwise gone to taxes. This can be a valuable benefit because of the tax savings as well as because it helps your employees see your organization as one that cares about their health and well being. Furthermore, the plans can be managed in-house or often outsourced to payroll and benefits management companies for relatively nominal administrative costs.

Working with a Benefits Broker on Health, Dental, Vision

Many nonprofits work directly with the largest health insurance agency in their market to choose a plan that they believe is the best that they can offer based on their budgets. Working with a trained and certified benefits broker, however, is often free for the organization as these individuals are compensated by the insurance companies. A good independent broker should be able to help you compare all of the plans at one provider against many of the other competitive companies within your market. Often, simply by negotiating one company against another, you may be able to get similar benefits for lower costs. Some nonprofits are also able to work through associations, such as the National Human Services Assembly, to access lower, large-volume rates that have been negotiated on behalf of many groups together.

During difficult economic times, it is not unusual for employers to ask employees to help shoulder some of the financial burden in order to ensure the long term stability of more people’s jobs. This may mean phasing out dental and vision coverage, or shifting a larger portion of the health insurance cost to the employees. Such measures are never easy, but many employees would prefer to see their benefits reduced if it means keeping the rest of their paycheck intact.


There are a number of online resources available that have more tips that might help you rethink benefits for your employees. Web sites such as and offer good places to start. Considering these tips and offering creative and flexible benefits will communicate that you value your employees and want to keep your organization competitive to active jobseekers.

This article was written by Commongood Careers and is published under a Creative Commons Attribution-NonCommerical-NoDerivs 2.5 License.

For more information about nonprofit and socially entrepreneurial careers, visit Commongood Careers at