July 1, 2014
Most nonprofits are focused on the future, putting their efforts into making their missions successful and helping those in need. The economy has stabilized and jobs are slowly coming back, even at nonprofit organizations where operating income isn't always the first priority.
A recent report from Indiana University shows how drastically employment rates in the nonprofit sector fell in Indiana during the Great Recession. Overall, more than 1,000 staff members at charitable groups across the Hoosier State lost their jobs due to the economic downturn that started in 2007. These numbers are similar, if not worse, than those of most other states, according to the report. The good news is that since 2011, both jobs and incoming funds have increased for nonprofits.
Keep required spending low to stay agile
While the economy is currently improved, nonprofits know that the market is volatile and lean times may soon arrive again. To keep operating with as few disruptions as possible, 501(c)(3) organizations should consider any and all ways to save money without having to sacrifice efficiency or quality. One area where significant savings can be found is to move from contributing to State Unemployment Insurance (SUI) pools to becoming a reimbursing employer. Instead of having to pay into large-scale state accounts, nonprofits can be responsible for only the unemployment claims of their own former employees. This cost cut can aid organizations that have high SUI obligations, as well as those worried contribution rates will rise as a result of expiring federal loans to states and corresponding increase in state unemployment tax rates.
However, this path requires that nonprofits find a way to manage risk. When organizations become reimbursing employers, a spike in unemployment can create a significant financial strain. Nonprofits can counteract this by participating in an unemployment savings program. This setup allows nonprofits to save money on possible unemployment claims without having to simply surrender those funds. An unemployment savings program allows organizations to carry any contributions as an asset and even bears interest. Payments can also be normalized and spread out over the course of a year, instead of the common payments made to SUI funds during the first half of each calendar year.
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!