Study shows challenges/trends for US nonprofits to manage employee retention

On the Miratel blog we try to examine all manner of reports pertaining to the nonprofit fundraising sector and today we focus on the changing nature of benefit plans for nonprofit employees and retention of staff in the sector. A greatly scutinized element of the industry is the internal management of operational funding and costs however internally much of this can equate to costs associated with employee retention and benefits. The economic downturn and recovery over the last six years has seen nonprofits of all sizes operate in a more similar environment as the for profit sector with cost controls and sharp reductions in staffing needed to allow operations to continue in a viable fashion.

As the economic situation has improved many of the obstacles faced by charities in recent years have revolved around internal recruiting and employee retention with many put in the position of finding and retraining staff to fill vacancies that were suitably filled a decade earlier before the economy contracted. Once staff are on board the challenge is maintaining their long term retention and satisfaction in an industry that has almost become as volatile as the corporate workplace. To that end a new study by PPI Benefit Solutions reveals some important data about nonprofits’ desire to deliver attractive employee health and welfare benefits while successfully managing the associated costs of such plans.

PPI Benefit Solutions (PPI), have been a major provider of benefits technology and services and possess more than four decades worth of experience partnering with nonprofits. Their 4th Annual Nonprofit Employee Benefits Study that compiles information about private, nonprofit employee benefit plans. In keeping with the trend (in the US due to private healthcare) nonprofits have moved rapidly toward choice-based programs like high deductible health plans in conjunction with online tools where the employee manages their own coverage and plans, methods which all go toward reducing adminstrative costs. This years study pulled data from over 250 charities and posed a number of questions regarding the administration and options related to these plans.

Medical benefits and coverage planning has changed beyond recognition in the US over the last 15 years and these same changes are impacting the nonprofit sector. At the turn of the century essentially all companies of a certain size offered traditional medical plans, in the nonprofit world (for those studied) this ratio remained at 96% in 2006 and had fallen to 83.6% at the time of this survey. In contrast High Deductable Health plans were now used by almost 44% of those studied, a rate that is almost double where it stood in 2009.

“Nonprofits are really struggling to maintain a comprehensive benefits package, and consumer-driven plans like HDHPs, health savings accounts and flexible spending accounts can be great, lower-cost options. The growth in these plan types, combined with the appeal of a predictable benefits budget, is also driving a lot of interest in alternative funding and enrollment solutions like defined contribution with an online marketplace that offers a wide array of product options.” Karen Greco, Director of Marketing for PPI Benefit Solutions

Technology and necessity have driven the adoption rate of automated benefits administration with 77% of those studied offering the service compared with 28% a year earlier. Allowing employees to select and manage their own care packages online via self-service platforms is now offered by 44% of all studied compared with just under 10% a year earlier. Nonprofits are working keenly to effectively manage costs but still deliver attractive health and benefit compensation to employees and while the industry is a year or two behind the private sector the changes now being seen are aimed at fostering stronger employee retention rates via employee satisfaction and the ability to source the best in new talent from the marketplace.

Some of the key data from the report (November 2013 vs 2012 data) is below:

• 83.6% offer traditional medical plans (down from 87.0% in 2012)
• 43.5% offer HDHPs (up from 39.0% in 2012)
• 88.7% offer group dental (down from 90.0% in 2012)
• 59.1% offer ancillary coverage (up from 46.5% in 2012)

Voluntary benefits (percentage of nonprofit employers who offer):

• 20.3% offer voluntary dental (up from 17.0% in 2012)
• 49.7% offer voluntary life (up from 43.0% in 2012)
• 9.6% offer critical illness insurance (up from 6.0%)
• 34.5% offer accident insurance (up from 34.0% in 2012)
• 24.3% offer transit reimbursement (up from 17.0% in 2012)

Contribution strategies:

• 16.1% pay the full cost of health insurance
• 74.8% share the cost of health insurance between employer and employee
• 21.9% already use or are likely to use a defined contribution funding approach

Source: Taylor Benefits.

My largest concern with such requisite wholesale changes is that the smallest organizations, who are already struggling to reach year over year fundraising targets, might be the least suitably positioned to orchestrate these changes internally at least in terms of making the initial changes needed. With that said the ultimate goal of reducing adminstrative costs/internal running costs is of huge benefit to the bottom line of these same smaller charities. The services offered by companies such as PPI therefore are critical to nonprofits looking to maintain a competite edge whilst proactively managing costs and providing the greatest incentive to their existing and incoming staff.

To download and read the full report please visit this link and I’d like to thank PPI Benefit Solutions for the data above.

About PPI Benefit Solutions: With over 40 years of benefits administration experience working with nonprofit organizations, PPI leverages strategic relationships with a broad array of nationally recognized insurance carriers and powerful, web-based technology to provide a single solution for multiple carrier enrollments and eligibility processing
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Miratel Solutions is a Toronto call centre, eBusiness, and letter shop mail house specializing in professional fundraising services including inbound telephone fundraising, outbound telephone fundraising, online fundraising, lottery fundraising services, donation processing and receipting and direct mail fundraising services. We are committed to our CSR business values in all our business decisions  and advancing the missions of the nonprofits we proudly serve.