How to Decide That Your Nonprofit Needs Paid Help - dummies

How to Decide That Your Nonprofit Needs Paid Help

By Stan Hutton, Frances Phillips

Knowing when to take the leap from being an all-volunteer group to being a boss or paid employee nonprofit isn’t easy, and it’s not a leap to take without looking at where you’re about to land. Hiring employees creates responsibilities for the board, not the least of which is paying a salary every two weeks.

You also need to pay payroll taxes and provide a workplace, equipment, and — don’t forget — guidance and supervision. Expect to have more bookkeeping duties and more complex financial reports because you need to keep track of payroll records, vacation time, and sick days and decide which holidays your organization will observe. (The last one should be a snap, right?)

To ease into the transition, a nonprofit may begin by hiring an independent contractor to handle a specific task, such as bookkeeping or grantwriting, and then go from there.

A variety of situations, such as the following, may signal that it’s time to hire your first employee:

  • Volunteers are growing tired, and the work isn’t getting done as well or as quickly as it should.

  • The demand for your organization’s services has increased to the point that someone needs to focus consistently on administrative details.

  • Resources have increased to the point that you can now pay a regular salary.

  • The organization is starting a new activity that requires someone with a specific professional license or degree, and no volunteer is appropriately qualified.

  • The nonprofit receives a major grant that both provides more resources and requires significant recordkeeping and program management.

Hiring salaried employees should be a long-term commitment. For this reason, you need to have sufficient cash flow to ensure regular payment of salaries, benefits, and payroll taxes.

A crisis can sometimes take place when a volunteer-run organization hires its first staff member. Knowing that they’re now paying someone to be responsible, board members may decide to sit on their hands and let others do the work.

Bringing on a first staff member is a good time to honor board and volunteer contributions to the organization (to keep motivation high) and to invest in a board retreat or training that reminds everyone of the work ahead and the board’s important role in it.

When you add paid employees to your organization, you assume legal responsibilities that begin with the recruitment process.