April 28, 2014
One of the greatest challenges for nonprofit organizations is cash flow. The need for services is unpredictable, as are the level of funding and the size of donations an organization receives. Ensuring that there is enough money to both pay bills and provide for the community requires meticulous financial management.
The ability to budget and manage cash flow is one of the most impressive feats accomplished by nonprofits since the recession. Since the economic downturn, grants from government organizations have dropped, as did funding from private donors. At the same time, demand remained high for nonprofits to help their communities impacted by the economy.
Nonprofits often have little money to fall back on. Clint Mabie, head of the Community Foundation for Southern Arizona, told Inside Tucson Business that 73 percent of nonprofits in the region have less than six months of operating reserves. Mabie explained these small reserves do not mean that nonprofits are irresponsible with money, but rather it's the reality of a cash gap caused by a lack of funding in the region.
Controlling cash flow by controlling costs
One way for nonprofits to keep their budgets healthy is to take advantage of as many programs as they can. Many organizations, while running a tight budget, are unaware of the wide array of grants and exemptions that could improve their budget. For instance, nonprofits have a great chance to save on their unemployment insurance (UI) costs. By switching to the reimbursable method, organizations can avoid unpredictable state UI tax pools and better manage their budgets.
As a reimbursing employer, nonprofits are responsible only for the actual number of UI claims paid out to former employees. Organizations with no unemployment would have no UI costs. However, if UI spikes, programs at the nonprofit could be put at risk. For this reason, it's important for groups to enlist the help of a UI specialist when considering opting out of SUI tax pools.
Savings programs provide nonprofits the maximum amount of savings and the least amount of risk. Insurance agents can also help their nonprofit clients save a substantial amount on their UI costs by informing them about such programs. These savings can be used any way an organization wishes, allowing them to grow and expand or build a stronger cash reserve. Reimbursing is one the easiest grants that a nonprofit can give itself.
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.
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
We’ve been a member of First Nonprofit’s Unemployment Savings Program since 2011 and highly recommend joining. The program is terrific and allows us to earn interest on our own funds while still meeting the state’s requirements on unemployment payments. In addition, the staff are great and always helpful sorting out any questions we may have. Thank you all!
CCSCT was approached by First NonProfit to discuss its Unemployment Savings Program and ways the program could significantly reduce the amount of unemployment taxes we were paying. At the time, our agency was paying approximately $80,000 per year. First NonProfit conducted an analysis to determine if making the switch would be in our best interest, and it clearly was based on our circumstances. The first year on the program, CCSCT saw a 70% reduction in its unemployment costs and each year, continues to experience further reductions as a result of having minimal claims. Some additional benefits of the program including having a fixed annual cost, an interest-baring reserve account, professional unemployment claims management and representation at all unemployment hearings. This has been one of the best decisions we have made.
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.
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.
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.
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.
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.