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Is a PEO Right for your Nonprofit?

July 18, 2016

Nonprofit organizations face many challenges – especially when it comes to time and resources. It’s hard to focus on fulfilling your organization’s mission when you’re stuck in the office dealing with HR. Professional Employer Organizations (PEOs) make it possible for you to spend more time making the world a better place and less time worrying about recruiting, benefits, payroll, insurance, liability and other HR concerns.

The Value of PEOs
More and more businesses – including nonprofits – are beginning to see the value of PEOs. According to the National Association of Professional Employer Organizations (NAPEO), approximately 250,000 small to medium-sized businesses (SMBs) and 2.5 million people take advantage of PEO arrangements.

A PEO can help your nonprofit:

Focus on what counts. Nonprofit executives are experts on their organization, but most know very little about HR. Because PEOs can manage time-consuming HR tasks, board members, executive directors and staff will have more time to focus on key concerns, like programs, fundraising, members and volunteers.

Run more efficiently. Nonprofits often understaff in order to decrease administrative expenses and increase program support. PEOs partner with boards of directors and senior executives to streamline business operations through customized HR management of recruitment, employee relations, health benefits, retirement plans, payroll, taxes, workplace safety, workers’ compensation and unemployment insurance, regulatory compliance and more.

Save money. Nonprofits usually have a limited budget. PEOs help nonprofits save money by providing the expertise of an entire HR department – HR director, employment attorney, benefits specialist, payroll specialist and work safety manager – at a price that may be the same or less than the salary of a single HR employee.

Appeal to donors. By improving efficiency and cutting costs, PEOs can help improve Charity Navigator, United Way and Better Business Bureau ratings (which are largely based on assessments of nonprofit management). A higher score can make a nonprofit more appealing to donors, sponsors, community partners, members and volunteers.

Reduce liability. PEOs are co-employers; in other words, they are the legal employer of a nonprofit’s personnel and they assume all employment responsibilities. PEOs have a vested interest in reducing risks and liabilities and take a proactive approach to preventing – and, if necessary, managing – lawsuits and claims.

Attract and retain dedicated talent. Nonprofits usually can’t compete with for-profit companies when it comes to salaries. PEOs have pooled-client buying power and are eligible for high-quality benefits packages that most charitable organizations can’t afford. By hiring a PEO, nonprofits can overcome the disadvantage of lower salaries by offering premium benefits – including medical and dental insurance, life and disability insurance, paid time off (PTO) and retirement plans – that will attract top talent and increase employee retention.

Don’t let HR responsibilities get in the way of making the world a better place. PEOs provide HR expertise so you can focus on your nonprofit’s mission, appeal to donors and attract and retain talent. For more information on PEOs or how AccessPoint HR can help your nonprofit, call 866-513-3861.