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 FNCUI@firstnonprofit.com or visit www.firstnonprofitgroup.com.

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WI Council of Religious & Independent Schools (WCRIS), Madison, WI

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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.

Gulfside Healthcare Services, New Port Richey, FL

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!

Advancing Academics, Turtle Creek, PA

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.

Chicago Children’s Theatre, Chicago, IL

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.

Daniel Kids, Jacksonville, FL

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.

Homes of Hope, Chicago, IL

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