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Not-For-Profits Hit Hard By Staffing Shortages

By Bob Findley, CPA, Director at Blue & Co.

The job market is hard for everyone, especially for not-for-profits. The U.S. unemployment rate dropped from 6.9 percent in October 2020 to 3.9 percent in October 2023, but not-for-profits still struggle to find qualified workers.

A survey by the National Council of Nonprofits in Spring 2023 showed that almost 75 percent of the not-for-profits that participated had job openings, and more than half of them had more openings than before the COVID-19 pandemic.

Not-for-profits have experienced decreases in funding sources the last few years which puts pressure on budgets while maintaining competitive wages. COVID-19 pandemic relief programs like the Paycheck Protection Program (PPP), Employee Retention Credits, and state and local grants have ended or are winding down. Charitable giving has been decreasing as well.

The Association of Fundraising Professionals reported that in the first quarter of 2023, fundraising dollars have decreased, driven by a decline in the large donor and new donor segments. This is the seventh consecutive quarter of year-over-year decline in donor participation. Giving USA reported a decline from 2021 to 2022 of 3.4 percent; however, when adjusted for inflation the effective decrease in philanthropic funding was 10.5 percent.

Another challenge facing not-for-profits is an aging workforce. The U.S. Bureau of Labor Statistics reports that the private not-for-profit sector has a 26.6 percent workforce aged 55 and older compared to 20.8 percent in the private for-profit sector.

All of this makes it difficult to find employees to provide vital services to the public.

What additional means will not-for-profit employers need to consider to supplement their workforces?

Expand their search for volunteers by utilizing websites that seek to match volunteers with not-for-profits. Local organizations exist like United Way of Cincinnati and Cincinnati Cares that allow people to search for volunteer opportunities by cause and location.

Partner with government agencies like the AmeriCorps. AmeriCorps has full-time, team-based, residential service programs for 18 to 26 year olds that complete a variety of service projects for a duration of anywhere from three to 13 weeks. There is also a program to engage Americans 55 years and older in volunteer service called the AmeriCorps Senior RSVP Program. Not-for-profits interested in partnering with AmeriCorps should visit americorps.gov/partner.

Start an internship or co-op program. While similar, these programs are different. Internships can be paid or unpaid and give students an opportunity to develop their skills and learn about different organizations during the summer or during the school year. Co-op programs are “cooperative” education where the student is in a full-time paid position that alternates with their academic semester. These programs are an excellent way for a nonprofit to find and “try-out” future employees.

Outsource part-time positions and special projects. Many times, not-for-profits are unable to afford to staff full-time CFO and controller positions to manage complex financial and tax reporting and compliance. Organizations should consider engaging CPA and other firms that have trained employees that are available a few hours, a month or longer, depending on their need.

Chad Nieter, the Client Accounting Services (CAS) Practice Leader in Blue & Co.’s Cincinnati office, works with many not-for-profit clients on a recurring and project basis. Recent projects of his team include assisting clients in preparing for their annual audit, negotiating an increase in construction lending capacity, improving their understanding of their financial statements, unraveling a payroll tax issue, and training their staff.

Outsourcing can be a very flexible option with CAS practices assuming all or part of the accounting or finance function. The fractional nature of outsourcing will allow many not-for-profits to access higher levels of expertise and supplement their own Controller and CFO level professionals. Outsourcing can also help fill in the gaps when there are vacancies on your accounting team. In many cases, the cost of outsourcing can be similar to the in-house cost due to the highly experienced professionals working for CAS practices who are very efficient.

If you have concerns about staffing your not-for-profit, please contact your local Blue & Co. advisor.

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