Nonprofits can’t overlook risk reduction and good financial management

August 6, 2014

Nonprofits can’t overlook risk reduction and good financial management

Juggling priorities is a skill that many nonprofits have mastered. There are many stakeholders, from employees and board members to donors and those benefiting from projects. There is also the ever-present need to fundraise and generate awareness. Add in all of the responsibilities that come along with operating any business whether for-profit or a 501(c)(3) organization – such as financial management, performing payroll duties and managing the human resources aspects of operations – and running a non-profit can seem like an all-the-time job for managers and directors.

Top-level employees at a charitable organization need to make sure they're doing everything possible to eliminate unneeded expenses. Not only does this help create a more financially healthy nonprofit and cut down on liability, it leaves more money available to funnel directly into programs supporting the nonprofit's mission. Making sure that grant money is going toward the specific parts of the operation for which it was designated – a common stipulation for such contributions – is another unique concern. Nonprofit Quarterly recently highlighted the case of an Alaskan nonprofit group that had trouble successfully managing its grant and ran into problems with the provider.

One unnecessary financial obligation that can be avoided
An area that often causes consternation for nonprofits is the payment of state unemployment tax (SUTA). Although automatically exempt from the federal version of this tax, charitable groups have to actively take steps to free themselves from the state-level obligation. Nonprofits can declare themselves as reimbursing employers, which uses the alternative strategy of direct reimbursement of unemployment claims from former employees on a dollar-for-dollar basis instead of SUTA contributions. This strategy means that 501(c)(3) groups and governmental organizations don't simply lose the money contributed to SUTA funds if they don't experience any jobless claims during a financial year.

However, nonprofits may be unprepared to deal with a spike in unemployment, should they reimburse on their own. This is where alternative solutions such as an Unemployment Savings Program or Excess Loss Insurance become very useful. By paying into a system that provides more access to designated funds rather than simply giving it away to a SUTA trust fund, nonprofits have control and insight into this money that was not previously available.

For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Group at or visit


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We first started using First Nonprofit’s Unemployment Savings Program when we were a small startup nonprofit.  We didn’t have an HR department and needed expertise in the event that an unemployment claim was made.  We knew we were eligible to be a reimbursing employer, but weren’t sure how to navigate that process.  They made it easy to set things up, plan for, and then manage claims when they came at a very reasonable cost. The amount of time and stress they’ve saved us dealing with all this has been worth way more than the cost.  We’ve now grown to a large nonprofit and do have an HR department but have no plans to stop using their services.  I highly recommend them to every nonprofit I come into contact with!


Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.

Prevent Blindness America, Chicago, IL

Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.

Illinois Network of Charter Schools, Chicago, IL

It has been our sincere pleasure to maintain a strong, vibrant business partnership with First Nonprofit. We greatly admire their strong industry knowledge, technical expertise, constant professionalism, knowledgeable and dedicated staff. They are always extremely responsive, personable and provide us with the necessary guidance and recommendations on a numerous variety of employment scenarios.

Thresholds, Chicago, IL

NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.

New York Council of Nonprofits, Albany, NY

Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.

Visually Impaired Preschool Services, Louisville, KY

Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!

Neurologic Music Therapy Services of Arizona, Phoenix, AZ

First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.

Visually Impaired Preschool Services, Louisville, KY