NPT/Bluewater Study Shows NPOs Paying Up for Employee Healthcare

June 12, 2017       Mark Hrywna      

The United Way of Northwest Louisiana (UWNL) and Friends of Van Cortlandt Park (FVCP) might seem as if they are worlds apart, separated by some 1,500 miles. Like any nonprofit though, they face their unique challenges when it comes to salaries and benefits to attract and retain employees.

UWNL has managed to keep turnover to a minimum among its 10 full-time employees and roughly $3-million budget. There’s an effort to offer a hearty benefits package to try to offset what’s probably a lean salary. During the past few years, though, the Shreveport, La.-based affiliate has faced increases of up to 20 percent in medical plan costs, according to Chief Operating Officer Lynn Stevens.

They moved away from 100-percent funded healthcare for employees two years ago, going to an 80/20 split for its Preferred Provider Organization (PPO) plan. That’s about in line with what most charities do. According to The Nonprofit Times and Bluewater Nonprofit Solutions 2017 edition of the Nonprofit Organizations Salary & Benefits Report, the average percentage paid by an organization for an employee-only plan is about 84 percent. It ranges anywhere from 79 to 90 percent, depending on the number of employees. Almost 500 organizations from around the country participated in this year’s survey.

Among the almost 100 partners working with United Way, Stevens said she’s seen some charities do away completely with the benefits plan for all but management or offer it on a different scale.

She attributed the increasing healthcare costs to a limited choice of health insurance providers in Louisiana and the Affordable Care Act (ACA). “Three years in, we’re seeing some of the ripples get to our state,” which prior to ACA did not have a high percentage of residents with health insurance, Stevens said. Louisiana typically ranks near the bottom among the 50 states in most health indicators and the ACA increased health insurance coverage in a state where there are only about five carriers.

Almost 87 percent of nonprofits surveyed offered some type of medical plan for employees. The most popular among the survey participants is a Preferred Provider Organization (PPO) Plan, with almost 65 percent offering it. At least half of the organizations in each category by size offered a PPO plan, with the smallest, 1 to 10 employees, being the most popular at 73 percent.

Other plans, by popularity, included High Deductible High Plan (HDHP), almost 31 percent, and Health Maintenance Organization (HMO) Plan, almost 28 percent. The least common medical plans were Point Of Service (10.88 percent) and traditional fee-for-service indemnity plan (1.76 percent).

Survey results indicated that participant organizations might be moving toward a HDHP plan, with the percentage of organizations offering it up 52 percent last year compared to 2015 while HMO and POS plans both declined, 3.3 percent, and 7.7 percent respectively. The percentage of nonprofits offering PPO plans was up about 5 percent.

The New Hampshire Coalition Against Domestic & Sexual Violence has paid 100 percent of health and dental insurance for employees for more than a quarter century. Pamela English, administrative director at the Concord, N.H.-based nonprofit said that’s rare among Granite State charities and they want to continue to cover 100 percent to try to overcome lower salaries. The center might save elsewhere, such as several years ago reducing the contribution to its 403(b) retirement plan from 3 percent to 1 percent.

The center is a pass-through organization, with almost $4 million of its total $6 million budget derived from state or federal sources and being directed to its member programs. Its own operating budget of $1.7 million covers 16 staff, including four part-timers, and also includes $300,000 in stipends for AmeriCorps staff. Much of the work at the center is focused on policy as opposed to direct service, like its 13 crisis centers. That’s the biggest challenge for its member programs on the front lines but the center has always budgeted for 3-percent merit increases.

English said the organization recently bumped up some staff salaries toward the higher end of the wage scale. But it still can be difficult to compete in the region, with considerably higher salaries that still might be worth the hour-long commute to Boston.

Friends of Van Cortlandt Park (FVCP) has fewer than 50 employees so it’s not required to provide health insurance. But forthcoming increases in the state-mandated minimum wage, even for interns, will outpace increases seen across the nonprofit sector, according to the survey.

Executive Director Christina Taylor has had to boost the hourly wage for interns and will have to next year as well to comply with New York state’s minimum wage law. She fully supports raising the minimum wage so people can earn a decent living and as FVCP’s executive director, she experiences first-hand how employers have to deal with the increase.

The average staff salary increase in this year’s survey approached 3 percent; 2.87 percent last year and 2.88 percent the year before that. The average wage hike was similar across all budget levels and fields. Increases by operating budget ranged from a low of 2.31 percent among organizations of $10 million to less than $25 million to a high of 3.21 percent among those $500,000 to less than $1 million.

By field of work, average wage hikes varied from 2.28 percent among education organizations to 3.66 percent and 3.67 percent, for arts, culture and humanities organizations and environment and animal groups, respectively.

Geographically, the average salary increases varied even less. The lowest average increase was found in the South Central, at 2.59 percent, but the highest increase, in the Southeast, was 3.16 percent.

Located in the New York City’s northernmost borough of the Bronx, FVCP is considered a large employer (10 or more staff) so summer interns this year will earn $11 an hour, which will rise to $13 after next year, and $15 in 2019. That level will approach the hourly wage of the part-time educator position that supervises interns, so Taylor plans to increase that post’s salary within its roughly $350,000 annual budget.

The Friends will participate in this year’s New York City’s summer youth employment program, Taylor said. Interns will be paid through that program’s funding so long as Friends supervises them.

Health insurance is not one of the biggest costs for Friends of Van Cortlandt Park, because it doesn’t offer any. The big bills are workers compensation and liability insurance due to the work they do being outdoors in parks. The lack of medical benefits is a challenge as far as finding employees and recruiting but Taylor focuses on other ways to make up for it, keeping morale up and making sure everyone enjoys what they are doing.

“I try to be flexible with certain things, for example, projects they’re really excited about, pet projects within the organization that are still within mission that they get excited about, it’s helpful,” she said.

Even when Friends has been able to offer health insurance as a choice between that or a pay raise, the candidate took the pay raise because they were younger than 26 and still covered by their parents’ health plan under ACA.

Unlike some small organizations, Friends hasn’t had much staff turnover, outside of one part-time position that usually turns over each year. Taylor has been there for 10 years as executive director, and seven years before that as education coordinator. “I love what I do; I love the park, I love the flexibility,” she said. “If I ever thought about leaving, it never seemed like a good time for the organization, who’d want to step into that situation,” she said.

Stevens said salaries at her United Way have been flat this year and she doesn’t anticipate any raises because of the increased expenses and flat income. In previous years, they’ve tried to provide cost-of-living increases but those have been less than 3 percent, on average.

She worries that her region — a combination of rural and urban that covers about 10 counties with a population of a half-million — could face a talent shortage in the coming years. “Not everyone chooses to go into nonprofit anymore. It’s not a sexy job anymore. People fall into it by accident,” she said. “In our area, about 15 directors are ready to retire. There are not enough middle managers trained up, and we’re having that conversation now about how to get them ready.”

For the first five years as executive director of the 12-year-old Friends of Scotchman Peaks Wilderness (FSPW), Phil Hough took no salary, and then spent three years at half pay. As a founding board member, he’s passionate about the cause and that passion is embodied throughout the organization, he said, with most board members there from the beginning.

The Sandpoint, Idaho-based FSPW has an annual budget of about $250,000 and Hough is the only full-time employee. There are six part-time staff, including two seasonal employees, making for about two fulltime equivalent (FTE), he said.

In recent years, he’s shifted from programmatic work to focus more on fundraising and advocacy, trying to get a federal designation for the Scotchman Peaks Wilderness.

As a small organization, the main benefit it can offer is matching a situation with a person’s needs, Hough said. “That’s the reason we have part-time staff, because each of them wants to work part-time,” he said. Three employees are parents who want to work some but have young kids and they like to have a part-time, flexible schedule.

Scotchman Peaks doesn’t offer healthcare plans for employees. Hough priced out healthcare plans once before the ACA and twice after it took effect. It was much too expensive for such a small number of employees, as much as two or three times the cost of purchasing healthcare individually, he said. The organization used to offer a small stipend to offset costs, about $125 monthly for employees working at least 30 hours a week, but the ACA has since prohibited that. Instead, Scotchman Peaks made small adjustments to salaries and hourly rates.

Medical plan coverage for part-time employees varied widely among survey participants. Almost one-quarter of organizations surveyed (23.4 percent) offered medical plans to part-time staff. The largest nonprofits, those with 200 or more employees, were most likely to offer coverage at 38.24 percent compared with 10.71 percent among those with 101 to 200 employees. At the same time, at least one-quarter of nonprofits in each range of size from 11-25 and 26-50 to 51-100 employees offered coverage to part-timers.

Flextime is not uncommon among employee benefits offered at nonprofits but it’s not quite as prevalent as one might think. Medical insurance was the most common benefit among nonprofits in the survey, at 97 percent, followed by paid company holidays, 88 percent, and there was a big drop-off after that:

• Paid bereavement time, 75 percent

• Dental insurance, 72 percent

• Paid vacation, 69 percent

• Paid sick leave, 68 percent

• Retirement benefits, 68 percent

• Basic life insurance, 64 percent

• Flextime, 55 percent

• Vision insurance, 48 percent

There are inherent challenges to flextime from a manager’s point of view, Hough said, but it’s built upon relationships. “We’ve been able to develop a culture and maintain this model of flexibility,” he said.

The organization has enjoyed a pretty steady retention rate, unlike the overall average in this year’s study of 12.25 percent annual turnover. In addition to Hough being there from the start, the program coordinator has been in the post for eight years.

“We’ve got a very stable staff, not a lot of turnover. So we tend to operate in a way that I’m matching needs and money. We’ve been pretty successful at finding money for needs that we envision,” Hough said.

Scotchman Peaks last year hired a part-time mountain goat education coordinator, a paid volunteer coordinator during the summer to address a specific need. Volunteers are on the ground where there have been conflicts between humans and mountain goats. Mountain goats seem tame, walking right up to hikers. They are not friendly. Conflicts landed some hikers in the hospital with stitches two summers ago.

“You can put up posters, mail postcards, do articles and press releases but the most effective way is to talk to people where they are,” Hough said, so trail masters tell hikers to leave the mountain goats alone. It’s been so effective, he said, they plan to continue the position this summer.

“We’re about the level that we can sustain for the foreseeable future,” Hough said. Eventually, once the wilderness designation is achieved, work will shift from advocacy toward more stewardship, he said. “What’s likely to happen is less hours, and less people, or both, some money to fund advocacy will dry up so we have to figure out how to match that percentage reduction,” Hough said.

The biggest challenge going forward will be economic uncertainty and the potential for political upheaval and advocacy, he said. The new fiscal year, which begins Oct. 1, “is the murkiest I’ve faced four to five months out yet. There’s a greater degree of uncertainty coming into the next fiscal year than I have ever seen before,” he said.

Still, with good cash reserves, Scotchman Peaks is fairly nimble and Hough does have a few fallback options, if necessary. The first salary to be cut likely would be his, reducing his own hours, rather than part-time staff. “There’s greater certainty for them,” Hough said. “It helps with their comfort level. There’s a lot to be said for that on an organizational level but not every organization can say that,” he said.

Almost 87% of nonprofits surveyed offered some type of medical plan for employees.

  • Affordable Care Act
  • Friends of Van Cortlandt Park
  • Nonprofit
  • Nonprofit Organizations Salary & Benefits Report
  • Preferred Provider Organization
  • The United Way