It seems every business and nonprofit organization is hiring, and lots of workers are eager for new and better jobs. According to the U.S. Chamber of Commerce, more than 47 million workers quit their jobs in 2021, many seeking increased pay along with improved work-life balance and job flexibility.

This spring, employers added 372,000 jobs, and the unemployment rate dropped to 3.6% — a near-record low in many states. But many nonprofits still have openings. To shed light on the particular hiring challenges nonprofit organizations are facing, the National Council of Nonprofits conducted a survey in the fall of 2021, asking more than 1,000 charitable nonprofits from all 50 states for input. The results were illuminating.

Job Vacancies Abound

Charitable organizations cannot meet their missions without staff in place, and current job vacancy rates are concerning. More than a quarter (26%) of survey respondents reported that they had openings for 20% to 29% of their positions, and 16% of respondents said they had more than 30% of their positions open.

Reduced services. For many organizations, this vacancy rate translates directly to an inability to provide services. For example, client waiting lists are growing longer or are being closed altogether, services are being limited or reduced, and staffs are being asked to do more.

Salary constraints. Even in the best of times, nonprofit organizations have a hard time competing for staff due to salary constraints. Pay disparity between for-profit and nonprofit organizations became even more of an issue during and after the “Great Resignation,” with workers able to negotiate ever higher salaries in the face of a labor shortage. In many cases, fundraising has not kept up with increased salary demands.

In the survey, a whopping 79% of respondents identified salary competition as a hinderance when filling job openings. Many organizations also noted an inability to provide competitive benefits and retirement packages as a factor. Nearly a quarter of respondents cited workers’ inability to find childcare as a hinderance to recruiting and retention.

Remote work. The popularity of remote work also hampers some nonprofits’ hiring. While certain jobs can be accomplished remotely, others cannot. For organizations that provide direct services, remote work does not work. This has also spilled over into the volunteer arena. Many volunteers have not returned to in-person service post-pandemic, creating a need to hire staff to replace them — which leads back to the root labor shortage.

Burnout. And do not overlook the nature of some nonprofit work as a downside. Serving people in crisis at shelters or behavioral health facilities is stressful. Worker burnout is rampant, and the pandemic left many without the emotional capacity to cope with more stress.

Fixing the Big Picture

Many nonprofit organizations are feeling especially vulnerable, left reeling by the pandemic and struggling to find qualified workers to join their staff. Survey respondents shared several ideas for big picture reform.

Shift culture. Donors are generally less interested in covering operating costs than they are funding services. Several survey respondents described a “culture shift” required to cover infrastructure, competitive salaries, and benefits. Nonprofit organizations must be prepared to communicate how funding the operating costs helps their organization provide services more effectively.

Create stability. Many nonprofit respondents underscored the idea of securing “multiyear support” (versus shorter duration support) from funders so the organizations can create longer staffing plans without relentless budget fears. This change will require a concerted effort to impact funding cycles and expectations.

Reform funding. A significant number of nonprofit organizations perform services on behalf of governments under grants or contracts. Unfortunately, many of these agreements use outdated and insufficient reimbursement rates that do not fully cover the cost of services or salaries. A lobbying effort is required to raise awareness of this issue with state and federal governments.

Capture true costs. There is a lack of timely and accurate data regarding nonprofit employment and cost of services. In fact, the National Council of Nonprofits reports that the U.S. Bureau of Labor Statistics does not currently collect employment data for charitable nonprofit employers, and nonprofit employment data is only released every five years. No other major employment sector is ignored in this way.

Keep up with costs. Many nonprofits provide services based on fixed rates established years ago that are not adjusted regularly for cost of living, inflation, or other increases. Some states only adjust their rates for inflation every five, 10, or even 20 years. Without these built-in “escalators,” nonprofits face inordinate strain to cover costs and provide services. Similarly, while federal rules require governments to cover the full cost of services — including indirect or overhead — many government entities do not comply. A review of these reimbursement policies is a must.

What to Do

Of course, fixing the big picture will take years. In the meantime, nonprofits are struggling to fill employment vacancies and maintain their levels of service. If competing on salary is not currently a viable option, nonprofit HR executives have other suggestions.

Push the mission. Your organization’s good work will attract those who want to make an impact. Seek those with a passion for your organization’s mission by promoting your values and sharing successful program results.

Use your network. Your volunteers, your board, and your current employees provide the best endorsements for your organization as a place to work. Be sure everyone is aware of open positions and candidate requirements. In addition, share your job vacancies with your professional networks. Your financial, legal, and insurance advisors are well connected and in contact with groups of people you typically might not interact with.

In related action, consider lobbying state legislators to bring awareness to your mission and challenges. While nonprofits often avoid political involvement, trade organizations must lean in to capture attention and resources.

Promote from within. The overall labor shortage is creating enormous opportunities for employees to rise to meet next-level challenges. Consider promoting from within your existing workforce to retain good workers and give them a chance to shine. Be aware of where you need to spend your training and development efforts and dollars. You may need to invest more in skill building for mid-level workers.

So, is the nonprofit staffing issue a challenge or a crisis? The National Council of Nonprofits suggests it is the latter — a “workforce crisis in need of rapid remedy.” However, the report also concludes nonprofit HR executives are hopeful that the overall employment outlook will normalize soon.

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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.




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