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.
Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.
My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!
First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!
My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!
I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years
ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!
I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
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!