Paid Staff

As an organization continues to grow, it may require paid staff. Paid staff fill positions volunteers don’t have time for or that require specialized training. Our research showed that 60% of nonprofits had at least one paid staff person. 82% of organizations surveyed had their first paid staff person within two years of formation.

Once fundraising allows, achieving paid staff members is an exciting milestone for any organization. However, paid staff are not without operational challenges.

The IRS generally does not want to see administrative staff (directors, accountants, and fundraisers) accounting for more than 20% of an organization’s expenses. Programmatic staff — those essential to the operation of the organization — are not limited by this percentage. For example, an organization may employ an Executive Director limited by the 20% rule and a Social Worker who is not.

Nonprofits generally cannot compete on salary. Finding dedicated employees who believe in your mission and are willing to accept an appropriate pay rate can be difficult. Our research study showed that new nonprofits with paid staff often experienced high initial turnover rates. Please know that finding the right nonprofit team takes time.

While paid staff are great, programmatic staff are often the most expensive part of all nonprofit organizations. Unfortunately, our research showed 60% of nonprofits furloughed staff due to the COVID-19 pandemic. Letting team members go is no doubt a heartbreaking decision for any organization. It’s also why organizations should rely on volunteers as much as possible due to the lack of expense incurred.

When paying staff, ensure you have a proper payroll system that tracks all necessary taxes. While nonprofit organizations are exempt from corporate tax, they must still pay federal withholding and employment taxes for all employees. Plus, if your state has an income tax, it may be required for the organization’s employees. As an add-on to our bookkeeping services, BryteBridge can handle any size payroll.

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