October 10, 2013
Nonprofits in most states are quickly approaching the deadline to opt out of their state unemployment insurance tax programs, which are becoming a financial drain on many employers. In California, where federal loan debts for UI have hovered around $9 billion in recent months, employers could see increases for years to come. Likewise, New York currently has an outstanding loan balance of around $2.7 billion, according to Investor's Business Daily.
While nonprofits and governmental organizations have long had the option to opt out of state UI systems, the Great Recession's unprecedented strain on the system makes now a more important time than ever before to do so. Even states like Illinois, where federal loan debt has been repaid with the issuance of municipal bonds, nonprofits can still save an average of 53 percent on UI costs.
Alternatives to state UI pools available
The savings for nonprofits and governmental organizations are the result of tax law that allows such entities to reimburse the state only for the amount specifically paid to former employees. In state UI pools, all employers pay in at a specified tax rate, which continues to increase in states with federal loan debt, and the contributions are not proactively reduced if a company's employees collect less than was paid into state funding pools.
The reimbursing financing method is an excellent tool for nonprofits and governmental organizations experiencing financial pressure following the Great Recession to cut avoidable costs. The written request to individual state unemployment agencies for most other states falls on Nov. 30 to elect to opt out of the state program for 2014. California, Illinois, Minnesota, New Hampshire, New York and Wisconsin all have until Dec.31. New Jersey, Oklahoma and Oregon have until Jan. 31, 2014; Tennessee nonprofits have until May 31, 2014.
Self-insuring to cover unemployment does come with risks and is not the right choice for all nonprofits and governmental organizations. Groups such as First Nonprofit offer savings programs for nonprofits that wish to take advantage of the self-reimbursement option and can help file the necessary paperwork with state agencies. First Nonprofit can help your organization decide if opting out of the state UI tax program is the right choice and manage future paperwork associated with UI claims.
For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Companies at FNCUI@firstnonprofit.com or visit www.firstnonprofitcompanies.com.
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First Nonprofit has saved us so much money over the state’s program. We had one little glitch with the state recently and we contacted FNP immediately. FNP staff called us back immediately and moved to remedy the problem.
First Nonprofit has been a great partner. They have helped us saved hundreds of thousands of dollars! They have awesome resources for our nonprofit organization. Thanks for the partnership.
Life is certainly busy these days but having business partners like First Nonprofit has made some of the process hassle free. We have worked with this team for years. When we changed payroll systems, they outlined every step. I think this team is terrific and I know they get the job done! Thank you, Cruz, to all the team at FNP.
FNP has helped our agency to save thousands of dollars every year on our unemployment coverage. The service is phenomenal, and we are thankful to their team as our partner. My experience working with Marshall on the advocacy around UE for nonprofits was also a highlight as someone who teaches advocacy and lobbying for nonprofits. Really, your whole team is top shelf, so thank YOU!
Chicago Children’s Theatre has greatly benefited from our partnership with First Nonprofit, and I have always enjoyed working with the staff on our filings and any complicated questions. I would not hesitate to recommend First Nonprofit to fellow nonprofits. We’re very happy customers.
FNP is a great resource for Daniel Kids. To have a TPA that we can count on to take point on not only managing our unemployment claims, but to support and guide any protest hearing, is invaluable. All the professional support staff we have worked with have been excellent, very knowledgeable and responsive. We are grateful for the help and support, thank you.
When I first began in my position at my organization, I hadn’t had experience working with a company like FNP. The staff was so patient and helpful in helping to explain the benefits of First Nonprofit. Anytime I reach out with a question I receive a quick, clear, and thorough response. I’m so thankful that we decided to partner with FNP. Their excellence in customer service, coupled with their variety of packages frees us up to truly serve our staff and community with a peace of mind knowing that our organization is protected against unanticipated unemployment insurance expenses.
First Nonprofit gets an A+ in my book. You are so easy to work with & very knowledgeable! Whether it is my quarterly correspondence with Kim or my random interactions with Dawn about a bond … I am so pleased that I get to work with such a helpful company. Thank you!