The season of giving is upon us. And most nonprofit organizations are in the midst of making their year-end appeals. I hope you are getting out your checkbooks and considering how you will generously allocate your charitable dollars. Will you be donating to neighborhood-based organizations, human service agencies, healthcare providers or cultural institutions? The opportunities to make a difference are endless.
I personally have a ritual on New Year’s Eve when I reflect on those organizations that I believe are having the most impact on our community. Then I go online and make my contributions before midnight. Others donate in honor of friends and family in place of greeting cards and expensive holiday gifts. And I love the story from Advent UMC where the congregation donated more than $260,000 on Christmas Eve to provide housing for homeless families.
This year as we support our favorite nonprofits, take a moment to consider a significant governmental change that impacts many, if not most, of our local organizations. On Dec. 1, the Department of Labor was set to raise the salary threshold that establishes whether certain “white collar” workers are exempt from overtime pay. Although a judge has placed an injunction on the new rules, the proposed changes would raise the gross salary level from $455/week ($23,660/year) to $913/week ($47,476/year).
Salaried employees paid below the new threshold will generally be eligible for overtime pay, which most did not receive in the past. Most employees paid at or above this threshold will be exempt from receiving overtime. If the new rules are ultimately put in place, the effect of this change could be a game-changer for nonprofits, and yet it is difficult to argue against revising an economic threshold that has only been adjusted once for inflation over the past 40 years.
What does this change mean for your favorite organizations? Over the past months, nonprofit leaders have diligently studied their operating budgets and evaluated their staffing requirements. They have consulted with labor attorneys and human resources experts to figure out how they can do more with less.
The bottom line is they really have only a few options:
Continue current salaries below the new threshold of $47,476 and limit employee hours to 40 hours or fewer per week. To ensure that non-exempt employees do not exceed 40 hours/week employers must realign hours, workloads and staffing levels. This approach may also require hiring additional staff.
Continue current salaries below the new threshold of $47,478 and pay employees overtime when necessary. These new overtime-eligible employees must be paid overtime whenever they work more than 40 hours/week. This approach may be advised for employees who typically work 40 hours/week and occasionally require overtime. If this is the case, the nonprofit employer should plan and budget for the anticipated overtime.
Raise salaries of employees who are close to the new threshold to $47,476.
If these employees meet the duties test, which establishes their responsibilities are truly those of an executive, administrative or professional employee, they will maintain their exempt status and will not be eligible for overtime.
Now let’s consider the people behind the payroll projections – the individuals who work tirelessly to serve others in our communities. Our nonprofit friends are a dedicated and passionate lot, sometimes to a fault. They work long hours – meeting with clients, answering late night calls and staffing fundraising events.
Empowering others to succeed is not something that only happens from 9:00 to 5:00 Monday through Friday. Those of us on the cycle of success realize it is a 24-7 commitment. Can we truly ask nonprofit employees to “turn off” after 40 hours? While the December 1 adjustment may seem simple on the surface, it comes with considerable implementation challenges.
In summary I ask the following questions: 1) Are nonprofit salaries aligned with the value of the work? 2) What would our communities be like if we did not have these folks with their passion and dedication to serving others.
While I understand precarious budgets and uncertain funding streams, I also recognize that we must pay folks fairly for their work. Let’s get away from misperceptions, like the overhead myth ratio, and the belief that nonprofit employees should be paid less because they are doing what they love – working for nonprofits.
Let’s support paying our nonprofit friends fairly and recognize the value of what they do. The new salary threshold should be a conversation starter about the value of their work. It gives us the opportunity to increase our support of these brave change agents who are tackling the challenges in our communities.
In the wise words of my friend Darrin Goss, President and CEO of the Coastal Community Foundation, “Rather than focusing on how we can do more with less, let’s consider the possibilities. How can we do more with more?” Please think big when you open your wallets this December. Consider the folks working behind the scenes of our favorite nonprofits and what we would do without them.