Did You Know That Non Profits Can Avoid Unemployment Insurance?
In case you didn’t know, 501(c)(3) organizations are not obligated to pay unemployment taxes. Non profit organizations typically are not aware of this option since the state unemployment office rarely provides this information. Nonprofits can choose to protect themselves by participating in a private unemployment trust such as The Nonprofit Trust. Funding unemployment obligations this way can help nonprofits substantially reduce their costs, especially if the organization has over $1,000,000 in payroll.
- Nonprofit employees often make less in wages yet nonprofit employers are still charged just as much, if not more, than private sector employers.
- Nonprofit employers tend to have more part-time labor which actually increases unemployment tax expenses.
- Nonprofits usually have lower unemployment claims than private sector employers.
- Due to the economy, unemployment taxes increased in 29 states last year. (Increases were as high as 161% in certain states).
- Over 25 state unemployment departments are now insolvent and borrowing money from the Fed. just to pay claims, increasing the need to increase tax rates. This number is expected to climb to nearly 40 by the end of 2011!
- States are overpaying claims in error by more than $1,000,000,000 per year!, and the problem is increasing due to the sheer volume of claims being processed due to the economy.
- Savings average between 40% and 50% EVERY year.
- Claims administration handles all communications with the unemployment office including initial notifications, claims protests, hearing representation, etc., reducing staff time spent on unemployment, driving claims costs down by winning more cases than employers do on their own (94% vs. less than 50% for employers) and by auditing every single claim processed, catching overpayments made by the states and they are corrected.
- Free Human Resources Hotline that assists with any type of HR issue, not just unemployment related issues, which can save the nonprofit time and money in getting the answer they need.