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Unemployment insurance cost facts every Rhode Island nonprofit should know!

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What do state unemployment taxes (SUTA) and claim overpayment rates mean to your nonprofit?

These factors could mean less money for your nonprofit organization’s cause.

$772 Average SUTA Cost Per Employee

Average state unemployment tax costs per employee range from $!21 to $953 per employee across the country. With an average cost of $772 per employee, Rhode Island ranks as the 4th highest.

$20 Million Unemployment Claim Overpayments

Rhode Island’s April 2014 – March 2015 unemployment claim overpayment rate was 11.841%, equaling over $20 million.

$1.78 SUTA Vs. Benefits Paid

Rhode Island employers pay $1.78 in SUTA to the Department of Labor and Training for every $1.00 paid in unemployment benefits.

However, there are options to financing your nonprofit organization’s unemployment costs.

First Nonprofit Group provides state compliant, individually insured, cost-saving options to satisfy SUTA requirements for nonprofit, governmental and tribal entities. Below is a sample savings analysis of one of our Idaho members since 2009.

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We provide more than 1,800 organizations around the country with unemployment insurance at affordable rates. Click here or 1-(800) 526-4352 to request a free, no-obligation cost saving evaluation. Evaluations include a 2017 rate projection!

Did you know Maine’s state unemployment tax cost increased by 63% since 2009!

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What do state unemployment taxes (SUTA) and claim overpayment rates mean to your nonprofit?

These factors could mean less money for your nonprofit organization’s cause.

63% 2009-2015 Increased Tax Cost

The average state unemployment tax cost per employee increased by 63% from $191 in 2009 to $311 by 2015.

$33 Million Unemployment Claim Overpayments

Maine’s April 2014 – March 2015 unemployment claim overpayment rate was 23.692%, equaling over $33 million.

However, there are options to financing your nonprofit organization’s state unemployment costs.

First Nonprofit Group provides state compliant, individually insured, cost-saving options to satisfy SUTA (State Unemployment Insurance Tax) requirements for nonprofit and governmental entities. Below is a sample savings analysis of one of our members since 2009.

maine-graphWe provide more than 1,800 organizations around the country with unemployment insurance at affordable rates. Click here or call 1-(800) 526-4352 to request a free, no-obligation cost saving evaluation. Evaluations include a 2017 rate projection!

Delaware’s average state unemployment tax cost per employee increased by 88% since 2015!

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What do state unemployment taxes (SUTA) and claim overpayment rates mean to your nonprofit? These factors could mean less money for your nonprofit organization’s cause.

88% 2009-2016 Increased Tax Cost

The average state unemployment tax cost per employee increased from $214 in 2009 to $401 by 2015.

$13 Million Unemployment Claim Overpayments

Delaware’s April 2014-March 2015 unemployment claim overpayment rate was 16.394%, equaling over $13 million.

$1.75 SUTA Vs. Benefits Paid

Delaware employers pay $1.75 in SUTA to the Division of Unemployment Insurance for every $1.00 paid in unemployment benefits.

However, there are options to financing your nonprofit organization’s state unemployment costs.

First Nonprofit Group provides state compliant, individually insured, cost-saving options to satisfy SUTA (State Unemployment Insurance Tax) requirements for nonprofit and governmental entities. Below is a sample savings analysis of one of our members since 2005.

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We provide more than 1,800 organizations around the country with unemployment insurance at affordable rates. Click here or call 1-(800) 526-4352 to request a free, no-obligation cost saving evaluation. Evaluations include a 2017 rate projection!

Best and Safest Practices for SUI Options

This article was originally posted as part of the “Financial Mechanics of Funding SUTA” series.

Making the election to opt out of paying the state unemployment tax in favor of reimbursing the state for future benefits paid to former employees may complicate the budget process, upset typical cash flow, and create uncertainty about potential risks. But the best and safest options for managing the perils are very clear.

THE PROBLEM: Attaining maximum use of every dollar of revenue requires a rigorous and strategic effort from nonprofit organizations, governmental entities and tribal enterprises, EVERY YEAR! The center point for that effort is always the “Annual Budget” formation, which for many fluctuates capriciously often because of:

• Competition for services and funding dollars

• Changing state funding

• Changing federal financial support

• Regulatory compliance issues

• Changing workforce problems and necessities

Yet when those complications threaten the budget process, use of thoughtful, strategic options sustains and supports positive cash flow, sustained compliance and reliable protection.

BEST AND SAFEST PRACTICES: Employers successfully transfer risk and manage a variety of diverse liabilities (property & liability, auto, workers’ compensation, umbrella, D&O, etc.) by engaging specific insurance products. It is indisputable that an insured risk by a reliable, reputable insurance company is the safest solution for defending against unknown future liabilities. Accordingly, liability such as State Unemployment Insurance is similarly effective. Here are five of the best and safest solutions available for managing the State Unemployment Insurance (SUI) cost:

1. Bonded Service Program: Risk free, first and last-dollar coverage with claims administration

2. Unemployment Savings Program: Proprietary interest-bearing reserve with claims administration and stop-loss insurance

3. Excess Loss Insurance: “Working Excess Coverage” fits level of risk retention that works best for the employing entity

4. Surety Bonds: Required in many states for “reimbursing employers”

5. Group Program Management: Program formation, consultation, risk transfer design and administration for nonprofit entities, governmental entities and tribal enterprises

For more information about the best and safest solutions for State Unemployment Insurance, contact First Nonprofit Group.

Source: First Nonprofit Group’s “Financial Mechanics of Funding SUTA” series

Why Unemployment Insurance Exists

This article was originally posted in February 2015 as part of the “Financial Mechanics of Funding SUTA” series.

After the stock market crash in October 1929 and the subsequent Great Depression of the 1930’s, the national unemployment rate exceeded 25%. Simultaneously, throughout the world, industrialized nations began creating systems of insurance to support and compensate workers for wages lost during periods of unemployment. Nearly all of these nationalized systems became compulsory as each government enforced the coverage using laws, regulations and taxing powers to fund the growing financial liability.

The primary purpose of unemployment insurance is to deliver economic assistance and compensation to employees for wages lost during periods of economic decline and/or periods of involuntary unemployment. A secondary purpose, and one most relevant during the years that followed the Great Depression, is to keep the trained labor force in one location from dispersing to other locations where jobs are more plentiful.

The structure of unemployment compensation in the United States is a federal (FUTA, aka Federal Unemployment Tax Administration) and state (SUI, or state unemployment insurance, aka SUTA, State Unemployment Tax Administration) partnership that obligated states to comply with laws that occurred as a result of the Social Security Act of 1935. While the Act imposed a FUTA tax on all employers, a credit against federal taxes was provided if they paid state taxes to states with unemployment laws that met FUTA requirements and had solvent Unemployment Trust Funds. For example, employers in Massachusetts, Oregon and Tennessee were charged a 2014 FUTA tax rate of 0.6%, since their state unemployment agencies all have solvent Unemployment Trust Funds and meet FUTA requirements. Employers in Kentucky, North Carolina and Ohio had 2014 FUTA rate of 1.8%, since their Unemployment Trust Funds are insolvent and are therefore not eligible for a credit.

The Act gave states the autonomy to determine their preferred mechanisms of their own SUI programs. Consequently, the 50 state SUI programs and taxing procedures are all quite different and have contrasting impacts on employers. In the USA, as a matter of perspective, in 2014, the estimated 50 state average employer tax contribution as a percentage of gross wages ranges from a low of 0.36% (South Dakota) to a high of 1.71% (Washington), with a national average of 0.82%. Consequently, an employer with a $2,000,000 payroll would have a tax cost of as low as $7,200 in South Dakota and as high as $34,200 in Washington.

J Randall Stevenson, began his career as an employer advocate in the unemployment field in 1970. His SUI experience, knowledge and expertise in state and national SUI matters is varied and distinguished.

Source: First Nonprofit Group’s “Financial Mechanics of Funding SUTA” series

Pennsylvania’s budget impasse jeopardizes the entire nonprofit community

The Commonwealth of Pennsylvania has been under a budget crisis since July 01, 2015 and will continue to be until a new budget is approved. Gov. Tom Wolf proposed a 1.8 billion tax increase which the State House voted against. Since the government has been unable to agree on a solid 2015-2016 budget plan, the interruption of revenues to nonprofits’ programs creates a stressful condition for their employees and their constituents.

Many nonprofits’ funds are severely depleting and there is serious concern about how to continue for the foreseeable future programs in the absence of customary state funding. The Pennsylvania Coalition Against Domestic Violence Executive Director Jennifer Snyder stated in a recent interview with Pennlive.com that “her organization has already cut back on transporting victims to medical and legal appointments; has asked women to stay with family instead of at their shelter, and has reduced counseling sessions.”

The Pennsylvania Association of Nonprofits (PANO), a First Nonprofit Group member, has been a remarkable supporter of nonprofits since 1984. PANO’s mission is to amplify the impact of the community benefit sector through advocacy, collaboration, learning and support. During the budget impasse, PANO has provided support for nonprofits through advocacy calls and webinars that provide information on how to raise dollars to get them through until a new budget is approved. For more information on PANO, visit www.pano.org.

Resources
Pennsylvania budget talks are set to resume Wednesday – PennLive
Pennsylvania’s domestic violence, sexual assault centers will soon start closing due to budget impasse, organizations say – PennLive
In budget mire, far apart – The Inquirer
Nonprofits say they may soon reach crisis point due to state budget impasse – Pittsburgh Post Gazette

Upcoming Unemployment Wage Base Changes: Why These Changes matter!

A number of states have recently announced changes to their unemployment taxable wage bases that will take effect in 2016. (See chart below)

What is a state unemployment taxable wage base?

This is the maximum amount on which an employer must pay to unemployment taxes for each employee. For example, an employer in Kansas must pay unemployment taxes on the first $14,000 an employee earns throughout the 2016 calendar year.

Why is this information important?

An increase in the taxable wage base can also mean an increase in unemployment tax cost per employee. For example, if an employer in Washington had a 1.0% unemployment rate in 2015, their cost per employee would be $421 ($42,100 x 1.0%). In 2016, that cost would increase to $440, should their tax rate remain at 1.0% ($44,000 x 1.0%).

First Nonprofit Group offers several options to help nonprofit employers avoid these increases. Contact us today to request a free, no obligation savings quote!

 

 

 

Is Your Organization Prepared for a Data Breach?

In recent years, many of the biggest companies in the world have been victims of major data breaches. During that same time, thousands of small- and medium-sized businesses, including non-profit organizations, have also had their data compromised. Whether your organization is large or small, it’s critical to be prepared for a data breach. These steps can help.

 

Step 1 – Create a Breach Response Team. This cross-functional team should coordinate efforts throughout an entire enterprise and be the primary contacts should a breach occurs.

 

Step 2 – Assess storable data. It’s critical that know what information is being stored so an appropriate response can be launched. Here’s what’s critical to know:

• What type of data is being held about members, contributors, employees and vendors?

• Where is that data stored?

• Which systems handle this data and are security protocols and tools current?

• Which team members are responsible for each of those systems?

• Do any third parties handle your member data?

 

Step 3 – Assess existing liabilities and obligations. Once sensitive information in data files is known, a suitable action can be deployed on behalf of those parties who must be notified timely. Who must be notified and when? Who are you required to notify? How soon do they need to be notified?

 

Step 4 – Create a contact list. Identify stakeholders who need immediate notification. That may include   • Team members to be available to respond to unexpected necessities.

• Legal advisors to ensure all obligations are identified and included in the plan.

• All key contributors and partners who need to be informed or advised of a breach.

 

Step 5 – Create a communication plan. The sooner you alert your members are alerted, the better the long term outcome. Essential to communication are:

• How and when how and when members are alerted

• Who will address key contributors

• How and if this information to the media will be informed.

 

Step 6 – Don’t Panic. If a breach does occur and the above plan is in place, response should be automatic:

1. Contact the Breach Response Team and trust them to execute their tasks

2. Identify the data that has been compromised and take immediate steps to stop the breach and/or take the data offline.

3. Contact legal advisors to ensure all necessary legal steps are prepared.

4. If necessary, tailor a communication plan according to legal notification requirements.

5. Follow the detailed communication plan and alert the affected stakeholders (members, vendors, contributors, etc.)

 

This article is part of our continuing series to help our members better understand how to prepare and respond to a data breach. Look for our next article, “Shining a Light on the Dark Web”. Coming soon: Product solutions to help you prepare and respond to a data breach.   Current First Nonprofit members and clients have access to Cyber Monitoring at no charge. Members can sign up here: https://firstnonprofit.com/cyber-monitoring-benefit-sign-up-form/

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