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HR Policies For Nonprofit Organizations

hr policies for nonprofit organizations

Many nonprofits rely heavily on volunteers, but some also employ paid staff or contractors. A strong HR department ensures these employees are managed properly and in line with workplace regulations.

Beginning your employer liability journey can begin by approaching a director and officer insurance agent to seek guidance in employment law matters. Some agents offer educational programs or resources on managing employees and creating sound policies.


Effective HR policies for nonprofit organizations can have a major impact on their ability to fulfill their mission. By creating habits that minimize risk and make work simpler for employees, volunteers, and board members – HR policies for nonprofits play an integral role in fulfilling their missions successfully.

Nonprofits typically operate on tight budgets, so spending must be prioritized on areas directly supporting their cause. This may necessitate cutting back in certain departments – such as Human Resources – though HR remains vital in meeting employment law compliance and building great teams.

Payroll is an integral component of human resources for nonprofits because it serves as the means by which their employees and volunteers are paid. A nonprofit must offer competitive wages that attract staff; at the same time it must adhere to minimum wage laws as well as not exceed any upper limits so it may maintain tax-exempt status.

Some nonprofits may choose to outsource their payroll process in order to save both time and money while adhering to all employment laws. ADP provides this service, tracking employee hours, logging vacation/sick days, creating reports, etc.


Nonprofit employees play an essential part in enabling an organization to meet its mission. To attract and retain them, nonprofits must develop an attractive compensation package including benefits. This may be accomplished with an employee manual or online self-service portal that makes it simple for staffers to access personal data or request documentation as required.

Healthcare coverage is an essential employee benefit for nonprofits as mandated by the Affordable Care Act, with tax-exempt charitable nonprofits required to pay at least minimum wages in order to comply with state and federal regulations.

Nonprofits often struggle with managing their human resources functions with limited funding available to them, leaving little time or personnel resources to devote to developing effective employee benefits policies. When this occurs, nonprofits can leverage PEOs with expert staff and technological resources that handle day-to-day administrative tasks allowing in-house personnel to focus more effectively on strategic needs of the nonprofit.


Nonprofit HR teams face the daunting challenge of recruiting and hiring employees while adhering to budget constraints. To attract and retain quality employees, it is critical to establish a transparent hiring process for new positions within your nonprofit organization. It is also beneficial to outline employee expectations and performance review criteria in writing – this helps ensure all employees (part-time employees or volunteer workers alike) understand their job duties effectively.

Nonprofits may hire contract workers, interns and volunteers in addition to full-time staff members. It is crucial for nonprofits to understand the IRS rules surrounding classification of these employees as misclassification could result in uncollected taxes, fines and other penalties being assessed against the organization.

Engaging the entire organization in the recruitment and hiring process can help your nonprofit foster a welcoming work culture that attracts top candidates. Furthermore, investing in professional development opportunities for your employees – especially new hires – has been proven to increase engagement. When they feel valued they tend to remain more committed than when denied that chance to grow their abilities.

Performance Management

Nonprofit organizations utilize performance management processes to gather, analyze and disseminate information on the effectiveness and efficiency of their services. This data is vitally important to public officials at every level of government as well as board and executive staff members of nonprofit human service agencies who rely on this data to evaluate performance, make decisions and enhance policies and programs.

One effective way to enhance performance management is through giving both managers and employees feedback on performance management processes, providing clear guidelines, ensuring honest yet constructive dialogue, and giving sufficient notice before conducting performance reviews.

Nonprofits recognize the importance of having an effective performance review process in place, but implementing one may prove challenging. As non-profits may be subject to various regulations including state and federal employment laws, local income taxes, OSHA standards and more; working with an HR outsourcing provider may help nonprofits navigate through all these obstacles while remaining focused on meeting their mission.


Nonprofits must abide by different standards and regulations than for-profit businesses, so having a robust compliance program is vital for staying out of regulatory trouble and avoiding legal action. The first step towards creating such a plan should be establishing policies and procedures for common events like document retention, conflicts of interest, whistleblowing policy. In addition to this step, nonprofits should develop policies related to governance practices so as to ensure board members adhere to their fiduciary duties as part of this compliance plan.

Establishing and disseminating policies that ensure compliance with regulations are crucial in maintaining compliance. Furthermore, setting up an accessible reporting system such as an anonymous hotline could help monitor any possible violations that might arise; alternatively you could post this number online for easy accessibility.

Compliance can be an especially complex challenge for nonprofits, who must adhere to higher ethical standards than for-profit businesses. They must ensure they abide by all laws and regulations while building positive public perception and building trust with their constituents.

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