Finding the Best Professional Employer Organization (PEO) in the Nonprofit Sector

Finding a PEO (Professional Employer Organization) for a non-profit organization requires a slightly different approach than for for-profit businesses. Non-profits have unique challenges, including limited budgets, strict regulatory compliance, and the need for employee benefits that align with their mission and values. Here’s some tips on how to find the right PEO for a non-profit organization:

1. Understand Your Specific Needs as a Non-Profit

• Budget Constraints: Non-profits often work with tight budgets, so it’s crucial to find a PEO that can provide affordable services without sacrificing quality.
• Mission Alignment: The PEO should understand the unique culture and mission of non-profits and offer HR solutions that support these goals.
• Compliance with Non-Profit Regulations: Non-profits have specific IRS and state tax-exempt status requirements. The PEO should help ensure your organization remains compliant with these rules.
• Fundraising and Grant Management Support: Some non-profits may require assistance with HR-related tasks tied to grant management or specific reporting needs for donors.

2. Look for PEOs with Experience in Non-Profits

Some PEOs specialize in non-profit organizations or have extensive experience serving them. Here’s what to look for:

• Non-Profit Expertise: The PEO should understand the challenges non-profits face, including IRS regulations, employee retention strategies, and specific reporting and compliance requirements.
• Focus on Compliance: Non-profits must maintain specific tax-exempt status and comply with various local, state, and federal labor laws. Ensure the PEO has strong compliance support.
• Affordable Benefits: Non-profit organizations need cost-effective benefits packages that still offer quality coverage to employees. A PEO should provide affordable employee benefits, like healthcare and retirement plans, without burdening your budget.

3. Consider the Services Offered by the PEO

Non-profits often need more customized services from a PEO than for-profit organizations. Look for these key services:

• Payroll & Tax Compliance: Non-profits often have complicated payroll structures, with both full-time employees and volunteers. Make sure the PEO can manage these complexities, handle payroll taxes correctly, and keep you compliant.
• HR Support & Employee Training: Non-profits often need assistance with HR tasks, including employee management, volunteer coordination, and training programs that align with their mission.
• Employee Benefits: PEOs can help provide competitive benefits packages that include healthcare, retirement plans, and insurance options to attract and retain top talent.
• Risk Management & Workers’ Compensation: This is particularly important for non-profits that may have volunteers, contractors, or employees working in high-risk environments (e.g., community outreach programs).
• Grant & Funding Compliance Support: Some PEOs offer specialized services to help manage grants, funding, and compliance with donor requirements, which can be particularly valuable for non-profits.

4. Look for Transparent Pricing and Flexible Contracts

• Affordable Solutions: Make sure the PEO offers services that fit your budget. Many PEOs charge a per-employee-per-month fee, but some offer scalable pricing models that fit the needs of smaller non-profits.
• Value-Added Services: Ensure that the PEO’s services provide tangible value, especially in areas like tax filings, employee benefits, and worker’s compensation. Non-profits don’t want to pay for services that aren’t necessary.
• Flexible Terms: Some PEOs offer contracts with flexible terms, allowing you to scale services up or down depending on your needs. This flexibility is useful if your non-profit fluctuates in size or funding.

5. Ensure the PEO Aligns with Your Mission and Culture

• Mission-Driven HR Practices: A good PEO for a non-profit will understand your organization’s values and culture. They should be able to support employee engagement and retention strategies that are aligned with your mission.
• Employee Engagement and Retention: Non-profits may have limited budgets for salaries, so they need creative employee engagement strategies that go beyond compensation. A PEO can assist with programs like work-life balance, recognition programs, and other retention strategies.

6. Evaluate Technology and Ease of Use

• User-Friendly Platforms: Non-profits often have smaller HR teams or might rely on volunteers for HR tasks. Look for a PEO with an intuitive platform that’s easy to navigate and helps streamline HR processes, like payroll, benefits enrollment, and employee records management.
• Mobile Access: Many non-profits have employees who work remotely or in the field, so mobile access to HR tools can help streamline communication and management.

7. Seek Recommendations and Reviews

• Industry Recommendations: Ask other non-profit organizations or industry associations for recommendations on trusted PEOs. Peer recommendations are invaluable when evaluating PEOs for your non-profit.
• Online Reviews: Look for online reviews from non-profits that have worked with the PEOs you’re considering. Check websites like Trustpilot, Glassdoor, and Google Reviews for feedback.
• References: Request references from the PEO to speak with other non-profits they’ve worked with to get an idea of their experience.

8. Check for Accreditation and Industry Certifications

• NAPEO Membership: Check if the PEO is a member of the National Association of Professional Employer Organizations (NAPEO), which ensures the PEO adheres to ethical standards and best practices.
• IRS Certification: If the PEO is a Certified PEO (CPEO) with the IRS, it’s an indication of strong regulatory compliance and reliability.

9. Ask Specific Questions for Non-Profits

During the selection process, ask the PEO these key questions to assess whether they’re the right fit for a non-profit:

• Do you have experience working with non-profits and understanding their specific challenges?
• How do you support compliance with tax-exempt status and IRS regulations?
• Can you provide affordable benefits for employees while keeping costs low?
• How can you help with volunteer management and payroll for both employees and volunteers?
• What reporting capabilities do you offer to track grant usage, donations, and funding compliance?
• What steps do you take to help with employee engagement and retention, particularly for employees with lower salaries than for-profit organizations?
• Do you offer solutions that help streamline HR processes for small teams or limited HR resources?

10. Review Proposals and Select a PEO

Once you’ve narrowed down your options, request detailed proposals from the PEOs that seem like a good fit. Compare the proposals, considering the services offered, costs, and their understanding of non-profit challenges.

PEOs That Specialize in Non-Profit Support

StaffMarket currently works with 250+ PEOs across the nation that specialize in the non-profit sector. After gaining more information about your company’s unique needs, we then engage top providers in a competitive bidding process to get you the best solution, at the best rate available, the first time.

11. Finalize Your Decision

After evaluating the services, pricing, technology, and overall fit for your non-profit, make your selection and finalize the contract. Be sure to have a clear understanding of the terms, expectations, and ongoing support.

Sound like a lot of work? You are right. The good news our team has built the ultimate tool to save you a vast amount of time and resources on this journey. Our job is to find you the best PEO at the best rate available, the first time. We know how important of a decision this is to get right and we only win once you win through a strategic long-term growth relationship with your PEO. Our service is completely free to use, click here to get started: https://www.staffmarket.com/register