fringe benefits for NPOs

[Patricia Rouse]

I am a new non profit director in the process of budget narrative. I need to
justify the percent of fringe benefits that this corporation will provide.
There are 4 full time employees. Would any of you who have small non
profits care to share what percent fringe benefits is reasonable for a non
profit budget that is, say, $400,000 and personnel salaries that total
$175,000 before benefits? Do small non profits offer retirement plans and
medical options for employee and family and dental fringe benefits?. Do
small non profit employers match employee contributions to a 401K, for
example?

Thanks so much for any advise. I am working with the Grant Seekers Toolkit
book and have access to a CPA. This group would, however, be more helpful
in answering these questions.

Patricia Rouse,PT, Dir
Active NOW! Wellness Center
Kihei, HI

[Michael L. Wyland]

Patricia:

It's almost impossible to provide fringe benefits of less than 20% of base
salary. Rates of 25-30% would be considered generous, and anything above
35% would, I think, be considered exceptional.

Michael L. Wyland
Sumption & Wyland
818 South Hawthorne Avenue
Sioux Falls, SD 57104-4537
(605) 336-0244
(605) 336-0275 (FAX)
(888) 4-SUMPTION (toll-free)
mic...@sumptionandwyland.com

http://www.sumptionandwyland.com
-- free e-newsletter sign-up
-- new article: "The Giving Sky is Falling...Or Is It?"

[GlenRow]

I'd say to try to offer whatever level of benefits you can that will help
the organization attract and retain the best people as long as the
organization can afford to do so. Paying good salaries and good benefits
can be the sign of a well-run organization. The fact that it is a
non-profit should not preclude it from making the same kinds of smart
business decisions that for-profits make every day.

"Patricia Rouse" <rous...@hawaii.rr.com> wrote in message
news:vOV0b.17057$9F2.4...@twister.socal.rr.com...

[Patricia Rouse]

Thanks, Glenn, and to all of you who wrote to me directly with information
on your specific fringe benefits or offered internet references. Maintain
the same standards for non profits as you would for a profit business to
attract and retain employees seems to be most sensible advise.

Patricia Rouse, PT, Dir.

[Dgrie...@aol.com]

In a message dated 8/21/2003 10:43:13 AM Eastern Standard Time, rous...@hawaii.rr.com writes:

what percent fringe benefits is reasonable for a non
profit budget that is, say, $400,000 and personnel salaries that total
$175,000 before benefits?  Do small non profits offer retirement plans and

medical options for employee and family and dental fringe benefits?  Do

small non profit employers match employee contributions to a 401K, for
example?

Hi.

Nonprofit organizations offer from a low of $0.00 to as high as 27-28% of salaries and some more than that.  That does not, however, describe what is included in the calculation.  It also does not take into account the overall budget, the relation of salaries to the total budget.  It is not unusual for social service programs to have staff expenses reach 80% of the total budget. 

What can you afford?  Are the salaries you are paying comparable to similar organizations, public and private? 

NPOs have traditional and nontraditional fringe benefits for employees.  The list includes workers compensation, Social Security, unemployment compensation, health insurance, prescriptions, life insurance, dental and eye care, tax-sheltered annuities (TSA), employer-paid pension plan, college/graduate school loan forgiveness or assistance program, short term and long term disability, unpaid sabbatical, 401(k) matching funds, daycare services, flextime, telecommuting, and more.  In each case an employee should be given the Summary Plan Description (SPD) for all insurance and pension plans. 

The organization needs to have a written statement whether it is paying health, prescription, dental and eye care fully for the employee, whether there is a co-pay and whether the company is paying for dependents partially, fully or not at all.  Some life insurance policies allow for employee-paid increased coverage.  NPOs should consider and place in writing whether unmarried but life-partners are to be covered either by the organization or by the employee.  There are nonprofit associations in some 39 States that offer members health insurance group rates.

Employee benefits can include fringe benefits, Summary Plan Descriptions referred to for insurance (health, dental, eye care), Social Security, unemployment compensation, short/long term disability, workers compensation, pensions, Flexible Benefits Account Plan, credit union membership, severance pay, Tax Deferred Annuity, parking, etc.  Will the NPO pay for accrued but unused vacation, compensatory and/or health leave (pay at least the vacation leave)?  The Flexible Benefits Account can be a large help to employees by reducing the tax bite on the employees cost for medical and child care needs.  It requires an attorney to help review the Plan as there are monitoring rights for various government agencies, COBRA and ERISA can impact the Plan.

Leave policies are also among the costs to be assessed (vacation, health, holidays, jury/witness duties, voting, parental leave, personal leave, administrative leave, family death leave, definition of "family," sabbatical, flextime, telecommuting, weather emergencies -- there are others that agencies use).  Leave time has a cost to the employer.

There are other general benefits such as training, continuing education, student loan assistance, career development, dues, membership in professional organizations.

All of this has to be in context of the salary plan as well.  Has there been a salary comparability study to measure what the NPO can pay to be competitive with the private and government market for the same talents? 

I know of no NPO or other employers not facing a health insurance crisis.  There is an unfortunate movement by employers to cease such coverage as even part of the employer's payment.  More and more NPOs and other employers are passing greater costs onto employees for higher co-pay, higher deductible and higher share of the premiums.  Many are ceasing paying the premium for dependents.

Therefore shopping around for health insurance is a more than contacting an agent.  There are many health plans in all states from which an NPO can select taking into account all the factors above.  There are probably several choices in the Yellow Pages under Insurance and they are grouped by type of insurance.  Involving the leadership of the NPO and the staff may be a good idea to be sure they get the policies they can afford and coverage that is appropriate and at least fair to all.  My experience is this an annual process and takes some lead time, up to 6 months some years. 

On the fringe of all this is the issue of portability of health insurance from the NPO to another employer and into the NPO by an employee from another employer.  It may not be a cost issue but it can be a morale issue if there is misunderstanding among employees about the Health Insurance Portability and Accountability Act (HIPAA).

You may find some help from these sites -

http://www.healthinsuranceinfo.net/ (Georgetown University Health Policy Institute)

http://www.simplyhealth.com/ (an insurance company)

Best,

Don
Donald A. Griesmann, Esq.
Consultant with Community-based and Faith-based Organizations
Ventnor NJ
dgrie...@aol.com