As the economy has headed south and the cost of healthcare has risen, nonprofit organizations have been changing plans, deferring costs and dropping insurance plans altogether. Philadelphia Reads CFO, Camille Burke, says, “Insurance companies rule the world. You can’t apply for anything if you don’t have the right demographics in your company.”
Since not for profit organizations can’t compete with salaries offered by for-profits, they might instead offer stronger benefits to attract employees. However, it is becoming more difficult for organizations to maintain the same level of benefits they have been offering due to lower donations and increasing expenses. According to The Nonprofit Times/Blue Water 2010 Nonprofit Organizations Salary and benefits Report, 85 percent of charities offer a medical plan for employees and employee participation was consistently more than 53 percent.
Many organizations are beginning to reduce benefits and defer costs to their employees, according to Jose Pagouga, partner at Mercer Consulting in Atlanta. Not to mention, there is a noticeable shift away from pension plans and many nonprofit workers depending on spouses for healthcare. The Maine Association of Nonprofits saw a decline in the number of nonprofits offering healthcare since 1997. Philadelphia Reads, a nonprofit that has had a 50 percent funding drop in recent years, has dropped medical benefits and now only offers worker compensation and disability. Philadelphia Reads CFO, Burke, comments, “Rates just keep going up and for organizations like us, there’s just no way to find a cost-effective plan.”
Until an organization has at least 3 full time employees, no one wants to talk about health insurance and employee turnover is highest in the nonprofit sector. Linda Olson, executive director of Bright Horizons Resources for Survivors of Domestic Violence and Sexual Assault says, ” So many times we hire people and get them trained, they do really well and they get an offer somewhere else with better benefits. We try to stay competitive with salaries, but it seems once someone gets that experience, after working a year or two, they ca go somewhere else and make more money.”
Turnover is lowest in areas in the nonprofit sector where employees are very passionate or very connected to the cause or mission of the organization for whatever reason. This is probably why the turnover rate is lowest at religion-related charities, which have a 2.4 percent turnover rate. Jodi Nelson Chiriccosta, CEO at Somebody Cares International in Houston says,” Small organizations tend to have a very loyal staff. They’re there because of the mission, their passion for the mission, and it tends to be a closer-knit family.”
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