March 24, 2014
In mid-March, claims for first-time unemployment benefits rose by 5,000 to 320,000, according to Bloomberg. While these numbers rise and fall week to week, their fluctuation suggests the economy is still on its long road to recovery, and unemployment remains an important issue for organizations across the country.
Meeting the financial demand of unemployment benefits has proved difficult for many states that exhausted their funding pools following the Great Recession. States which borrowed from the federal government to meet an increase in unemployment claims are now struggling to pay down the debt. Employers in many states could see a reduction in federal tax credits, leading to higher unemployment insurance costs.
Options for nonprofits
Nonprofits do not pay federal UI tax, however, they are responsible for the state portion. State UI costs could also rise as governments attempt to rebuild funding levels in the state pools. Nonprofits are extended the benefit of opting out of state tax pools and becoming reimbursing employers, which can offer extensive savings. Opting out, nonprofits can avoid annually varying tax rates and reduce the actual cost of benefits to a dollar-for-dollar amount.
However, if unemployment suddenly spikes, nonprofits could see increased costs if they have not taken advantage of alternative financing programs. Alternative methods that offer nonprofits membership in a limited liability corporation or bonded service program provide organizations with the largest cost savings and the least amount of risk.
Nonprofits should also look for unemployment financing solutions that provide access to experienced administrators that understand complex state UI laws. These experts can conduct audits and help nonprofits avoid unnecessary risk and overpaying claims. The safest group programs should also limit the total risk, and do not increase the cost for one member organization for the increased claims of another.
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.firstnonprofitcompanies.com.
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
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.
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!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.