Nonprofits and Professional Employer Organizations (PEO)
Norman Olshansky: President
NFP Consulting Resources, Inc.
If you are a leader or an executive with a nonprofit organization and are unfamiliar with PEO’s, you may want to check them out.
Personnel costs are usually among the largest expense items for nonprofit organizations. While fundraising and revenue enhancement activities are the primary keys to sustainability, nonprofits also need to constantly address areas related to cost containment. In order to preserve programs and services, personnel benefits are often the first areas to be cut. Before you make those cuts, check out the potential savings offered through the use of a PEO.
You may have heard about PEO's in the past when they were known as employee leasing companies. PEO’s are not a temp firm, a staffing agency, or placement agency. You retain full control over your employees while the PEO handles payroll, payroll taxes, workers comp, benefit management, retirement services, government compliance, and liability management. You pay them a fee, provide them with your payroll information and they handle the rest.
PEO’s provides a service that allows your organization to outsource many of your human resource functions. Their size enables them to offer a package of benefits for your employees at a much lower cost than you and/or your employees may currently be paying. There is an economy of scale that they can provide that few nonprofits can match on their own. Simply stated, when you engage a PEO, they take over the administrative and compliance components of your human resources. Nonprofits can compete with national associations and Fortune 500 companies for the benefits needed to recruit and retain quality employees.
PEO’s provide you with employee handbooks, give guidance on employee policies and work with you to make sure you are in compliance with all local, state and federal fair labor, ADA and employment regulations. PEO’s offer many choices of packages to offer your employees.
I have found that you need to have at least 8-10 employees for the direct cost saving benefits to be significant. In addition to the cost savings, use of a PEO frees up your existing staff, who handle payroll and HR, from many of their regular duties and provides you with an additional level of expertise and guidance on HR issues.