A successful non-profit is hard to run, and non-profits are as varied as businesses in regards to their needs. The public might not think nonprofits are nothing like businesses, but you know this couldn’t be further from the truth. Both have missions and both need to be able to run efficiently and effectively. For non-profits with employees, this includes the need for HR and payroll attention.
This is where a PEO might come in. Time and resources to work on those tasks might be limited, so your non-profit can outsource those tasks to an outside expert company, known as a professional employer organization (PEO). These services also tend to offer other services and benefits to employers and employees alike, depending on the package. To learn more about these organizations, you can read our article here where we go into detail about what is commonly offered.
Below you can find our top five picks for PEO companies for nonprofits:
HIGH LEVEL OVERVIEW PEO SERVICES FOR NON PROFITS:
A nonprofit organization like a 501(c)(3) has unique requirements when it comes to workforce
administration, human resources management, and operational compliance. With all of the
regulatory requirements that need to be met in order for nonprofits to thrive, it’s no wonder that
so many of them seek out the help of a qualified Professional Employer Organization, or PEO,
to reduce costs, improve efficiency, and ensure that compliance standards are being met or
Here are a few key ways that PEO’s can help nonprofit organizations like yours:
- Benefits Administration – a PEO can handle all of the needs related to health
insurance coverage for your employees, including open enrollment, setting up an HSA,
- Quarterly Tax Filings – a necessity to retain nonprofit status, accurate and timely tax
filings can be completely managed by a PEO that has experience in the nonprofit space.
- Workers Compensation Claim Management – Nonprofit workers need to know that
they are covered if/when an on-the-job injury takes them out of commission. Having a
reliable workers compensation claim management strategy is one of the many ways a
PEO can help.
Additionally, many PEO’s offer nonprofit organizations enhanced services like productivity
tracking, recruiting, risk management, and HR consulting. Choosing the right PEO for your
nonprofit should take into account your unique needs in comparison with those outsourced HR
services offered by the many PEO’s that serve businesses in your area.
FACTORS TO EVALUATE WHEN CHOOSING A PEO FOR NON PROFITS:
When considering one PEO against the next, it can seem confusing to know what to look for.
While the vast majority of PEO’s provide their services to for-profit companies based or
operating in the US, there are some employee leasing organizations that have nonprofit-specific
services that have been developed with you in mind. Here are the most crucial areas for
evaluation of PEO’s that serve nonprofit companies:
- – Cost. Generally speaking, costs for PEO services range between $1,000 and $2,000 per
year, per employee. Some PEO’s do offer adjusted pricing schedules specifically for
nonprofits, so it’s important to look for this.
- – Nonprofit specialization. Many PEO’s have unique experience working with nonprofits,
experience that gives them an edge when it comes to understanding your unique needs
and tailoring services to meet them.
- – Additional features. Remember that very few PEO’s just offer payroll or benefits
management for nonprofits. Many of them have ancillary services that can significantly
improve the efficiency and cost effectiveness of your nonprofit organization
During the PEO evaluation process, don’t hesitate to ask for references of other nonprofit clients
that a PEO has worked with, to give you confidence that the PEO does in fact have the
experience necessary to properly serve you.
NON PROFIT PEO FREQUENTLY ASKED QUESTIONS:
What exactly is a PEO?
A PEO, or Professional Employer Organization, provides outsourced core HR and HR-related
services including payroll, benefits administration, tax filing services, and more. PEO’s help to
reduce operational costs and improve workforce efficiency.
Why should a nonprofit consider using a PEO?
A nonprofit should consider using a PEO because of the vast time and cost savings that are
available. There may also be company growth or scaling strategies that call for the use of a
PEO when certain conditions are met.
What are the costs associated with using a PEO?
PEO costs vary widely, but a good average cost for PEO services is $1,000-$2,000 per
employee, per year. These fees can be gradually lower as employee counts get higher.
How is pricing calculated?
Most PEO’s that serve nonprofits charge either an administration fee or a flat percentage of the
payroll, per employee. We consider the former to be better, as percentage-based fees can be
variable and thus more difficult to contain as your nonprofit grows.
How much does it cost to switch to a PEO?
Due to the significant cost associated with setting up a new PEO and enrolling your employees
in new programs, the cost to switch to a PEO ranges from $1,000 to $15,000 for most
How long does it take to get started with a PEO?
It typically takes between 3-6 weeks for most nonprofits to be set up and functioning well with a
new PEO. The industry average is 4 weeks.