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.
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.
We were introduced to First Nonprofit through another housing authority. In our analysis and comparison to what we were paying the State, our first year savings was $5,800 plus. We have been with them since the end of 2008 and I am glad we have been. I consider them an arm of our HR department.
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.
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.