Expanding Your Nonprofit’s Benefit Offerings
Kirsch CPA Group
Dec 14, 2022

Many job seekers and others assume that not-for-profit organizations offer fewer or less-generous fringe benefits to employees than for-profit companies. But that’s not necessarily true. According to a recent survey by the Nonprofit Times, 87% of nonprofit employers offer a health insurance plan. But as the Kaiser Family Foundation has found, only 49% of private for-profit companies with three to nine workers offer health insurance coverage to workers.
Larger for-profit companies generally do offer health insurance and other benefits. So your organization may not compete as effectively with those employers. After all, your budget can only stretch so far. But are you offering everything you could? Qualified fringe benefits usually are tax free to participants and tax deductible by the organization providing them. It may be time to review your benefits menu.
Why It Matters
Providing staffers with a robust benefits menu is particularly important now that the job market is tight. Many nonprofits are having a hard time staying fully staffed as workers quit for more lucrative positions. But a comprehensive fringe benefits package can be worth its weight in gold. In fact, a survey by workplace review site Glass Door found that 80% of employees prefer additional benefits to comparable pay hikes. Workers indicate they favor more benefits over higher salaries because benefits provide greater flexibility and job satisfaction in the long run.
Enhanced benefits can help you attract new staffers and hold on to the ones you have.
Your benefits may also enable you to distinguish your organization from others with similar missions. An applicant inclined to work for an organization that supports a worthy cause may opt to accept one nonprofit over another if it furnishes more benefits and more flexibility to use them.
6 Common Offerings
Review your benefits and consider how they compare with what’s typically considered a comprehensive menu:
1. Health insurance. This generally is the most in-demand benefit for prospective and existing employees. Your nonprofit may offer its own employer-sponsored health plan and pay a percentage of the premiums. Or it might pay at least part of the cost of non-employer-sponsored health insurance — for example, for plans offered by state health insurance marketplaces. Note that it’s rare for even for-profit entities to foot entire health insurance bills. You might also want to offer wellness programs that address certain issues such as exercise, illness prevention and stress management. These can be affordable add-ons to your health insurance plan.
2. Retirement plan. For many workers, this benefit is a close number two after health insurance. Your nonprofit could provide a tax-qualified plan such as a 403(b) (usually offered by not-for-profit employers) or even a 401(k) plan. With a 403(b), employees can contribute up to a generous annual limit ($22,500 in 2023, $30,000 for those age 50 and older), and, under certain conditions, your organization can contribute as much as $3,000 a year per employee account for up to five years.
3. Group-term life insurance. Many nonprofit executives expect a generous life insurance benefit. But there can be a high tax price attached to excess coverage. Only the first $50,000 of coverage under a group-term life insurance plan is tax free. For example, if an employee earning $150,000 is covered at three times salary, that person will owe tax on $400,000 of coverage ($450,000 – $50,000). The tax is computed according to an IRS table that bases tax amounts on an insured’s age.
4. Dependent care assistance plan. The first $5,000 of dependent care assistance paid by an employer under a written plan is tax free to employees. To qualify, an employee’s dependent must be:
- Under age 13,
- Physically or mentally unable to care for him- or herself, or
- A spouse who’s physically or mentally incapable of self-care.
But the tax exclusion amount can’t exceed the earned income of the employee or the earned income of the lower-paid spouse, if the employee is married.
5. Personal benefits. Some nonprofits provide personal benefits, such as parental and adoption leave and short-term disability insurance. These can help staffers and their families maintain financial (and psychological) stability during trying times. You might also want to consider training and education reimbursement programs and career advancement initiatives. These can be lower-cost and usually are appreciated by employees.
6. Extra time off. Many employees rank work/life balance as a top priority, and time off can be a way to help staffers achieve this. Your organization may want to grant employees extra time off to handle personal matters or simply to enjoy some R&R. Such benefits usually can be offered as paid time off, personal time, sick leave or vacation time. Some employers even give their staffs “mental health days.”
Falling Short?
After reviewing the above list, you may feel your organization falls short and that adding a benefit or two might help you attract and retain workers. Just know that you must follow certain rules to preserve favorable tax treatments. Contact Kirsch CPA Group to discuss your plans and the potential tax ramifications.
We can help you tackle business challenges like these – schedule an appointment today.
© Copyright 2022. All rights reserved.

About The Author
Kirsch CPA Group is a full service CPA and business advisory firm helping businesses and organizations with accounting,…
Tags
Sign Up for Email Updates
Related Articles





















Tax Treatment of Debt Forgiveness: Watch Out for Tax Bills Delivered COD
- 01-18-23
- Kirsch CPA Group












Manufacturers: Be Aware of These 3 Business Tax Provisions Currently in Limbo
- 01-18-23
- Kirsch CPA Group



The Tax Deductible Mileage Rate for Business Driving Increases for 2023
- 01-04-23
- Kirsch CPA Group






Succession Planning Considerations for Construction Business Owners
- 12-14-22
- Kirsch CPA Group






Prevent Fraud at Your Construction Company With a Holistic Approach
- 11-30-22
- Kirsch CPA Group









Manufacturers Must Act Now to Maximize Depreciation-Related Tax Breaks for 2022
- 11-09-22
- Kirsch CPA Group



It’s Time for Businesses to Rethink Their Working Capital Practices
- 11-09-22
- Kirsch CPA Group









Social Security Wage Base and Earnings Test Amounts Increase in 2023
- 10-27-22
- Kirsch CPA Group



New Law Enhances Payroll Tax Break for Small Manufacturers’ Research Expenses
- 10-13-22
- Kirsch CPA Group







































How Buy-Sell Agreements Factor into Business Owners’ Estate Plans
- 09-14-22
- Kirsch CPA Group









SALT Cap Workaround Law Could Save Ohio Business Owners Over $100 Million
- 08-31-22
- Kirsch CPA Group
























How Manufacturing Companies Can Benefit from the Section 179 Expensing Deduction
- 08-04-22
- Kirsch CPA Group



























Could the Work Opportunity Tax Credit Help Your Construction Company?
- 06-23-22
- Kirsch CPA Group






Good News: IRS Boosts Standard Mileage Rates for Second Half of 2022
- 06-23-22
- Kirsch CPA Group
























Education Benefits Can Help You Recruit and Retain Smart Employees
- 05-26-22
- Kirsch CPA Group









Ensure Your Construction Accounting System Has the Right Features
- 05-12-22
- Kirsch CPA Group





















John Kirsch Named to Greater Butler and Warren Counties Business Hall of Fame
- 03-25-22
- Diane Glover






Manufacturers Need to Act Soon to Take Advantage of 100% First-year Bonus Depreciation
- 03-17-22
- Kirsch CPA Group



























Commission Fraud: Salespeople Getting Paid More Than They’ve Earned
- 02-04-22
- Kirsch CPA Group
















































Consider a New Approach to Meeting Your Business Real Estate Need
- 09-17-21
- Kirsch CPA Group
























Beware: Teleworking Arrangements May Cause State Tax Withholding Issues
- 08-18-21
- Kirsch CPA Group
























5 Common Construction Accounting Risks — and How to Address Them
- 07-07-21
- Kirsch CPA Group















Supreme Court Finds No Standing to Challenge a Provision of the ACA
- 06-24-21
- Kirsch CPA Group






Labor Shortage: Unlock Solutions by Evaluating Your Employment Value Proposition
- 06-09-21
- Kirsch CPA Group









Material Participation Standard is the Key to Unlocking LLC Tax Losses
- 05-27-21
- Kirsch CPA Group









Know Your Legal Obligations Under the Americans with Disabilities Act
- 05-13-21
- Kirsch CPA Group



























PPP Loan Not Forgiven? There’s a Safe Harbor for Deducting Expenses
- 12-03-20
- Kirsch CPA Group












What You Need to Know About the Deferral of Payroll Tax Obligations
- 09-15-20
- Kirsch CPA Group


















PPP Loan Forgiveness – Significant Borrower Friendly Changes on the Horizon
- 06-04-20
- John Kirsch





















Tax Filing Deadline Remains April 15 – Payment Due Extended to July 15
- 03-19-20
- John Kirsch








































































Prepare to Receive a Social Security Administration No-Match Letter
- 10-15-19
- Kirsch CPA Group





















IRS Announces Changes for Personal Use of Employer-Provided Vehicles
- 06-10-19
- Diane Glover






























Watch Out for these Tax Issues When Planning for Your Business in 2018
- 06-26-18
- Diane Glover









What Image Does Your Organization Present to Large Contributors?
- 03-15-18
- Kirsch CPA Group



8 strategies to help you adapt to economic down turn without layoffs
- 02-24-18
- Diane Glover













































Remember To Take Required Minimum Distributions at Age 70 1/2 Or Face Penalties
- 02-17-17
- Sue Schloemer







































Time is Money: Don’t Spend Valuable Time Inputting Data into QuickBooks
- 06-18-22
- Diane Glover




