HR Challenges for Nonprofits

While missions, fundraisers and volunteers are what most people associate with nonprofits, what often gets overlooked is the professional staff needed to coordinate all those vital functions. And like any business, that means dealing with a bevy of HR challenges.

Kathleen Reardon, executive director of the NH Center for Nonprofits, says about 40% of NH’s nonprofit organizations have paid staff. While businesses are slightly more likely to have a formal HR department or an HR manager, in smaller nonprofits, HR is often combined with finance or operations.

“There are a lot of components to HR, and a strong leader has the ability to think through the work they are doing and the type of people they need to attract, but some of the details and finer points of HR can be a challenge,” Reardon says. “Just like in a small business, an executive director of a nonprofit tends to wear many hats.”

Reardon says some of the complex HR issues that crop up for nonprofits center around the way employees are classified and whether the pay is appropriate to the number of hours worked.

Amy Cann, managing partner at HR ROI Consulting in Portsmouth, says the most common challenges for nonprofits are the same as for-profits: hiring the right people, managing expectations and performance, addressing bullying or accountability, and developing the right leaders.

“I believe nonprofits think that everything will fall into place, but you have to work on the leadership and management side and address people issues and conflicts sooner rather than later,” she says.

Cann says nonprofits may struggle with managing performance and hiring the right people as they sometimes haven’t identified what they really need in an employee.  

Nonprofits are also challenged by the tight, competitive labor pool,  Reardon says. “I hear from nonprofits all the time about the challenges of hiring, particularly direct care workers, but we’re also seeing a lot of transition at the leadership level. There have been a lot of postings for development directors and executive directors. There’s a lot of opportunity in nonprofit if you’re looking,” she says.

Making the First Hire
It is common for nonprofits to begin as an all-volunteer endeavor or as a passion project that volunteers grow into a nonprofit organization, Reardon says. “It is a very exciting time for nonprofits when they make the decision to hire that first employee,” she says.

When that happens, it’s important for organizations to strategize what that role will be and how it will be structured. Often the first employee is the executive director. “Before anyone is hired, it is important to understand what role you are hiring and the success factors, and then make sure you hire the right person for the job,” Cann says. It is important to provide a realistic view of the job and organization before hiring a candidate, she says, and to provide regular feedback after they begin working.

Cann says to take time with onboarding and use feedback to create a more sustainable workforce.

Respecting Boundaries
When a board is all-volunteer, they are often highly involved in programs and making things happen. Bringing on an executive director can change the board’s role. They must oversee that person and ensure funding is there, says Reardon.

“They may still be involved as a volunteer managing activities but must start to think about how they partner with the executive director to support the organization in a different way,” she says.

Volunteers vs. Paid Positions
There are state and federal laws in place governing volunteer hours and activities to protect employees. Paid employees of a nonprofit cannot volunteer to provide the same type of services to their organization.

Resources
The NH Center for Nonprofits provides several templates, guides and research on its website, including an employee handbook template. Much of these resources are free, and more can be accessed by members.

Reardon says the center will also be offering webinars in January featuring an HR generalist as well as an employment law expert.  The Center also creates a nonprofit wage and benefit report that provides boards with an understanding of the market as they look at their compensation strategies.

HR-ROI sponsors a free monthly Nonprofit Peer to Peer group the second Tuesday of each month. It is open to all nonprofits and offers a variety of topics and guest speakers.

Molly Hodgson, CEO of GoodWork, a nonprofit incubator in Portsmouth, says it is common for nonprofits to not be fully prepared to become an employer.

GoodWork offers a monthly webinar and provides complimentary coaching and technical support to its incubator participants.