The same business case for a comprehensive benefits package in the private sector is applicable for non-profit organizations
Cakes are a pretty common commodity in office life. Whether brought in to celebrate a birthday, mark a departmental milestone or congratulate a co-worker having a baby, they’re a fairly inexpensive way of getting employees together and giving morale a bit of a boost.
But Kelly Grove, director of finance and administration for the Crohn’s and Colitis Foundation of Canada, a Toronto-based charity with 30 paid staff, said these are the kind of little perks that might be commonplace in the corporate world but are almost unheard of for non-profit organizations even though the morale boost would be equally appreciated.
“Are we going to spend $20 on a birthday cake when somebody else is spending $20 of their hard-earned money to send to us as a donation?” she said. “It’s looked at very differently.”
It’s just one example of how organizations in the non-profit sector are pressured to keep costs low, especially when it comes to providing pensions and benefits to full-time staff.
Stan Martin, vice-president of finance for Habitat for Humanity Canada, a Waterloo, Ont.-based charity with 18 paid staff, said benefits are just as important to his employees as they are for workers in the public and private sector. But it’s very tough to sell that thinking to donors.
“Philosophically, good charities are very conscious of their bottom line and employee benefit programs are notoriously expensive,” said Martin. “And although they’re good at staff retention, there is a tradeoff between public perception and staff retention.”
Having a lavish benefits package would undoubtedly create a backlash even if non-profit organizations could afford them, he said, but they have to offer something to entice talented workers to come on board and to stay once they get there.
“Not-for-profit people come into the field knowing that we are going to be paid less and receive less benefits and that’s what makes it acceptable,” said Martin. “Is it fair? Because we all have families and we all have the same dental issues and the same drug issues, so we accept it but I’m sure it would be our preference to have an equitable approach.”
Mary Ann Roscoe, national director of HR for the the Canadian National Institute for the Blind, an Ottawa-based charity with 1,200 paid staff, said pension and benefits packages are a chronic problem for the industry.
“We’re always trying to keep our costs lower while not compromising the program so much that the employees won’t see it as a good benefit package,” she said.
Symptoms of the problem
Lynne Toupin thinks it’s shameful that pension and benefits packages are a chronic problem for the non-profit sector. She’s the project director for Developing Human Resources in the Voluntary Sector, an Ottawa-based group funded by Human Resources Development Canada with the goal of strengthening the ability of non-profit organizations to attract, support and keep skilled employees.
She said pension and benefits costs are labelled as “administrative costs” — a phrase that has pretty negative connotations in the public’s eye when it comes to the non-profit sector.
“In order to attract donors we’ve used that language, of making sure that as much of your money is all going to the charity for the purpose it was intended to go, for many years,” said Toupin. “But, having said that, we’re eroding the base of people who are actually running these organizations.”
She said the language is starting to change and organizations are looking at these costs as more of an investment.
“The notion is, somehow, that if you pay somebody in a voluntary-sector organization, you’re detracting from the mission and taking the money away from somebody else,” she said. “We need to change that mindset because if we lose these people in droves, it’s going to have an impact on all Canadians at the end of the day. If you actually pay people decent salaries and you provide them adequate benefits and they feel some job security, that will have a positive impact.”
Non-profit organizations are fighting a recruitment battle on two fronts in attracting young workers and retaining aging workers, she said. And the lack of a strong benefits package is hurting both those endeavours.
“People in their 40s, who have been in the sector for some time, and who may not have adequate benefits plans, are certainly not as happy in their jobs,” she said. “If they have kids who are going to university, their salaries are not as high so that’s a problem. If they start looking at retirement — and God knows we get bombarded with the notion that you have to be prepared for retirement — they start getting nervous and they may want to look elsewhere.”
A Montreal woman Toupin met while doing research provides a perfect example of the challenges facing non-profit organizations. The woman has worked in the non-profit sector for close to 25 years, is in her mid 40s and is starting to have health problems. While the problems aren’t serious, they raised concerns in her mind that she should seek out a job in a different sector to get access to a better benefits package.
“She’s eminently qualified, because people in the voluntary sector tend to have academic degrees and good experience,” said Toupin. “And right now, with a public sector that’s looking for people, there’s a good chance she’ll leave. These people love their jobs but just can’t afford to stay.”
She said the industry is coming to the end of a generational and political cycle that could have serious ramifications.
“Looking at the demographics, we’ve got a population who came into the sector in the ’60s and the ’70s and were compelled by the notion they could make a difference and they stayed,” said Toupin. “Now you’ve got a younger generation that, quite frankly, didn’t grow up in the same context.”
She said young workers are much more concerned about having a pension because they’ve been repeatedly told not to count on the Canada Pension Plan being around when they retire. And they’re much more attuned to the idea of work-life balance.
“The jury is still out, but I don’t think they’re going to work 70 hours for lousy pay or put in those long hours the same way that we did,” said Toupin. “They’re much smarter about work-life balance than we were.”
Tackling the problem: Size may be the culprit
A report released earlier this year by Canadian Policy Research Networks, Job Quality in Non-Profit Organizations, showed that on the surface it looks like non-profit organizations are pretty competitive with their private-sector counterparts, even beating them out in some benefit categories. CPRN is a non-profit organization based in Ottawa that does research on social and economic issues. The report showed 53.8 per cent of non-profit employees reported having supplemental medical insurance compared to 52 per cent for the for-profit sector. But Toupin said a close examination of the numbers shows it’s a big problem for small organizations.
“We were pleasantly surprised to see that when you compare with the for-profit sector, we’re pretty close,” said Toupin. “What this tells us is that this isn’t just a voluntary-sector issue, but it’s also a small business issue.”
She said the study showed many employees in the big non-profit organizations had benefits, but those in smaller ones — and 75 per cent of all non-profit groups have less than 10 employees — had practically nothing.
“Insurance companies are not very willing to look at these small voluntary organizations for a number of reasons,” said Toupin.
Small non-profit organizations are not very stable because they often don’t know where funding is coming from year-to-year, which makes them less attractive than small businesses that have a relatively solid foundation in comparison. Another obstacle to getting coverage is simple economics — on a cost-benefit scale it’s simply not worth an insurance company’s time and effort, she said.
Looking strictly at the pension side of things, the picture is pretty grim for non-profit organizations — only about a third of workers are covered by some sort of retirement plan.
“And for the most part they tend to be RRSPs where the employer will put in some amount and the employee will put in some amount,” she said. “That’s nothing near resembling any kind of unionized pension plans or public-service pension plans.”
The group she leads is looking at ways of combating these problems, including pooling a number of small organizations into a virtual single entity for pensions and benefits purposes.
“If they’re just going to a broker on their own, well no insurance company is going to quote for them,” she said. “But maybe we can put in place a mechanism to somehow help find ways in which these organizations that are really looking for plans to have some way to do that.”
Non-profit organizations also need to recognize that young workers will probably not stay with them for a long period of time. Because of that, benefits packages will need a different kind of design that allows for portability. But for Toupin, the bottom line is that the issue needs to be addressed to ensure the long-term survival of non-profit organizations.
“We can’t step around the issue of salaries and benefits and it’s a complicated issue,” she said.
Non-profit organizations should adopt the corporate world’s language when it comes to justifying expenditures on pension and benefit packages.
“If you invest in having people with the right skills in the right jobs and you support them, the organizations will be better at what they do,” she said. “And because we’re focused on providing community service, it really can have a positive impact.”
But Kelly Grove, director of finance and administration for the Crohn’s and Colitis Foundation of Canada, a Toronto-based charity with 30 paid staff, said these are the kind of little perks that might be commonplace in the corporate world but are almost unheard of for non-profit organizations even though the morale boost would be equally appreciated.
“Are we going to spend $20 on a birthday cake when somebody else is spending $20 of their hard-earned money to send to us as a donation?” she said. “It’s looked at very differently.”
It’s just one example of how organizations in the non-profit sector are pressured to keep costs low, especially when it comes to providing pensions and benefits to full-time staff.
Stan Martin, vice-president of finance for Habitat for Humanity Canada, a Waterloo, Ont.-based charity with 18 paid staff, said benefits are just as important to his employees as they are for workers in the public and private sector. But it’s very tough to sell that thinking to donors.
“Philosophically, good charities are very conscious of their bottom line and employee benefit programs are notoriously expensive,” said Martin. “And although they’re good at staff retention, there is a tradeoff between public perception and staff retention.”
Having a lavish benefits package would undoubtedly create a backlash even if non-profit organizations could afford them, he said, but they have to offer something to entice talented workers to come on board and to stay once they get there.
“Not-for-profit people come into the field knowing that we are going to be paid less and receive less benefits and that’s what makes it acceptable,” said Martin. “Is it fair? Because we all have families and we all have the same dental issues and the same drug issues, so we accept it but I’m sure it would be our preference to have an equitable approach.”
Mary Ann Roscoe, national director of HR for the the Canadian National Institute for the Blind, an Ottawa-based charity with 1,200 paid staff, said pension and benefits packages are a chronic problem for the industry.
“We’re always trying to keep our costs lower while not compromising the program so much that the employees won’t see it as a good benefit package,” she said.
Symptoms of the problem
Lynne Toupin thinks it’s shameful that pension and benefits packages are a chronic problem for the non-profit sector. She’s the project director for Developing Human Resources in the Voluntary Sector, an Ottawa-based group funded by Human Resources Development Canada with the goal of strengthening the ability of non-profit organizations to attract, support and keep skilled employees.
She said pension and benefits costs are labelled as “administrative costs” — a phrase that has pretty negative connotations in the public’s eye when it comes to the non-profit sector.
“In order to attract donors we’ve used that language, of making sure that as much of your money is all going to the charity for the purpose it was intended to go, for many years,” said Toupin. “But, having said that, we’re eroding the base of people who are actually running these organizations.”
She said the language is starting to change and organizations are looking at these costs as more of an investment.
“The notion is, somehow, that if you pay somebody in a voluntary-sector organization, you’re detracting from the mission and taking the money away from somebody else,” she said. “We need to change that mindset because if we lose these people in droves, it’s going to have an impact on all Canadians at the end of the day. If you actually pay people decent salaries and you provide them adequate benefits and they feel some job security, that will have a positive impact.”
Non-profit organizations are fighting a recruitment battle on two fronts in attracting young workers and retaining aging workers, she said. And the lack of a strong benefits package is hurting both those endeavours.
“People in their 40s, who have been in the sector for some time, and who may not have adequate benefits plans, are certainly not as happy in their jobs,” she said. “If they have kids who are going to university, their salaries are not as high so that’s a problem. If they start looking at retirement — and God knows we get bombarded with the notion that you have to be prepared for retirement — they start getting nervous and they may want to look elsewhere.”
A Montreal woman Toupin met while doing research provides a perfect example of the challenges facing non-profit organizations. The woman has worked in the non-profit sector for close to 25 years, is in her mid 40s and is starting to have health problems. While the problems aren’t serious, they raised concerns in her mind that she should seek out a job in a different sector to get access to a better benefits package.
“She’s eminently qualified, because people in the voluntary sector tend to have academic degrees and good experience,” said Toupin. “And right now, with a public sector that’s looking for people, there’s a good chance she’ll leave. These people love their jobs but just can’t afford to stay.”
She said the industry is coming to the end of a generational and political cycle that could have serious ramifications.
“Looking at the demographics, we’ve got a population who came into the sector in the ’60s and the ’70s and were compelled by the notion they could make a difference and they stayed,” said Toupin. “Now you’ve got a younger generation that, quite frankly, didn’t grow up in the same context.”
She said young workers are much more concerned about having a pension because they’ve been repeatedly told not to count on the Canada Pension Plan being around when they retire. And they’re much more attuned to the idea of work-life balance.
“The jury is still out, but I don’t think they’re going to work 70 hours for lousy pay or put in those long hours the same way that we did,” said Toupin. “They’re much smarter about work-life balance than we were.”
Tackling the problem: Size may be the culprit
A report released earlier this year by Canadian Policy Research Networks, Job Quality in Non-Profit Organizations, showed that on the surface it looks like non-profit organizations are pretty competitive with their private-sector counterparts, even beating them out in some benefit categories. CPRN is a non-profit organization based in Ottawa that does research on social and economic issues. The report showed 53.8 per cent of non-profit employees reported having supplemental medical insurance compared to 52 per cent for the for-profit sector. But Toupin said a close examination of the numbers shows it’s a big problem for small organizations.
“We were pleasantly surprised to see that when you compare with the for-profit sector, we’re pretty close,” said Toupin. “What this tells us is that this isn’t just a voluntary-sector issue, but it’s also a small business issue.”
She said the study showed many employees in the big non-profit organizations had benefits, but those in smaller ones — and 75 per cent of all non-profit groups have less than 10 employees — had practically nothing.
“Insurance companies are not very willing to look at these small voluntary organizations for a number of reasons,” said Toupin.
Small non-profit organizations are not very stable because they often don’t know where funding is coming from year-to-year, which makes them less attractive than small businesses that have a relatively solid foundation in comparison. Another obstacle to getting coverage is simple economics — on a cost-benefit scale it’s simply not worth an insurance company’s time and effort, she said.
Looking strictly at the pension side of things, the picture is pretty grim for non-profit organizations — only about a third of workers are covered by some sort of retirement plan.
“And for the most part they tend to be RRSPs where the employer will put in some amount and the employee will put in some amount,” she said. “That’s nothing near resembling any kind of unionized pension plans or public-service pension plans.”
The group she leads is looking at ways of combating these problems, including pooling a number of small organizations into a virtual single entity for pensions and benefits purposes.
“If they’re just going to a broker on their own, well no insurance company is going to quote for them,” she said. “But maybe we can put in place a mechanism to somehow help find ways in which these organizations that are really looking for plans to have some way to do that.”
Non-profit organizations also need to recognize that young workers will probably not stay with them for a long period of time. Because of that, benefits packages will need a different kind of design that allows for portability. But for Toupin, the bottom line is that the issue needs to be addressed to ensure the long-term survival of non-profit organizations.
“We can’t step around the issue of salaries and benefits and it’s a complicated issue,” she said.
Non-profit organizations should adopt the corporate world’s language when it comes to justifying expenditures on pension and benefit packages.
“If you invest in having people with the right skills in the right jobs and you support them, the organizations will be better at what they do,” she said. “And because we’re focused on providing community service, it really can have a positive impact.”
