hr-policies-for-nonprofit-organizations

5 Essential HR Policies for Your Nonprofit Organization

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Trish

Your human resources policies should help your organization run like a well-oiled machine, providing transparent guidelines for staff behavior as well as employee recruitment and departure. 

In this article, we equip you with a whole host of nonprofit tips. The idea is to help you craft these policies to create and uphold a healthy workplace atmosphere.

For better readability, we have broken our tips into these sections: 

Let’s go!

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What Are Nonprofit HR Policies?

Whether you run an experienced organization or are just learning how to start a nonprofit, it is important to understand the purpose of a set of HR policies. If you were to get hit by the "Great Resignation" and most of your employees left, any new staff members should be able pick up right where they left off after reading these policies.

hr-policies-for-nonprofit-organizations-essential-policiesTrish is deep in thought on her nonprofit HR policies.

To get more specific, these human resource policies should align with your nonprofit bylaws to define the following at the very least:

  • Recruitment guidelines

  • Compensation structures

  • Onboarding, training, and performance review protocols

  • Job descriptions

  • Employment laws

Pro Tip: While bylaws address some topics that are related to HR policies, they are not the same. For example, bylaws and other documents that you draft as you are just forming your nonprofit, may talk about legal compliance, nonprofit bank accounts, and the National Change of Address database. These are not general topics that relate to all of your employees.

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5 Essential Nonprofit HR Policies

As it can be overwhelming to author nonprofit HR policies from scratch, focus on creating them one at a time. Each policy marks another step toward completion, putting you well on your way to your goal of having all-inclusive personnel policies.

Every nonprofit is going to have different policies based on what makes sense for them. However, at a bare minimum, your nonprofit — and all others — should address the following five essential organizational policies.

Pro Tip: Review your HR policies every six months, and make any larger changes to them annually. That way, you stay on top of developments within your industry, organization, and staff.

Employee Manual

While an employee manual is not required by law, it can make onboarding easier. It also gives employees something to look back on in case they have a question a few months or even years down the line.

These are the minimum points you should cover in an employee manual to ensure that everyone is on the same page about expectations: 

  • Performance expectations: Every nonprofit has at least a few major roles. For example, maybe your nonprofit has multiple project managers, membership coordinators, or staff accountants. For these big roles, outline the job descriptions in a chapter of the manual so that there is no confusion about expectations. Also, establish criteria for evaluation, including information about performance reviews and yearly raises.  

  • Termination: Explain specifically what incidents may lead to termination. There may be some cases where you have to fire someone for something that you do not have in the manual, but the manual should cover the common, major reasons, such as stealing money or equipment. Also provide a step-by-step explanation of the termination process. What happens to the employee’s benefits? Does the offense warrant legal action as well?

  • Departure: Similar to with termination, you should have the process for departure laid out in your employee handbook. This process is for employees who decide to leave voluntarily. We recommend asking for at least a two-week notice so that you have some time to start deciding how to recruit for their replacement. You also want to conduct an exit interview some time in their last few days so that you can see why they are leaving. You can then use this insight to tweak your other personnel policies. For example, if they are unhappy with their compensation, then maybe you need to reevaluate what you are offering.

  • Scheduling and leave: This chapter is meant to describe expectations for work hours. For example, should all employees work East Coast hours even if some of them live on the West Coast? Also explain the policy for holidays, vacations, appointments, sicknesses, and other leaves of absence. 

  • Code of ethics: This chapter outlines how employees, volunteers, and board members behave with integrity, honesty, and transparency. The presence of this formal statement ensures that your leadership team, and even the general public, can hold your stakeholders accountable for their actions. 

Pro Tip: Add an appendix to your employee manual. The appendix can redefine the manual’s major points in shortened, simpler terms in case employees want to refer back to the topics down the road.

Compensation

Working for the betterment of the planet and humanity is a fantastic perk on its own, but most nonprofit employees have bills to pay. 

hr-policies-for-nonprofit-organizations-essential-policiesTristan is excited to get educated on nonprofit HR policies!

While you naturally want to allocate as many of your nonprofit resources as possible to the pursuit of your mission, do not forget that your employees are the driving force behind all aspects of your work. They want and deserve to be treated fairly for their effort in the name of your cause. 

So, how do nonprofits pay their employees a competitive wage that reduces turnover and attracts talent? Research! 

While every organization handles their nonprofit payroll differently, start by scoping out how much charitable organizations of similar size, mission, and location are offering their employees.

Next, research benefits. Again, see if similar nonprofits offer insurance, bonuses, paid time off, and other perks on top of salary. Can you compete by offering some or all of these same benefits? Justify this action to management by explaining how spending a little extra money now to ensure staff satisfaction can save a lot of money down the line with decreased turnover.

Once you have your compensation package compiled, it is time to prepare the human resources policy that coincides with it. Organize it into two sections — one for executive compensation and another for non-executive compensation. An explanation of pay and benefits should accompany each major role. Here is a list of some major roles on both the executive and non-executive side that your policy should cover:

  • Board of directors

  • C-suite

  • Fundraising director

  • Membership director (if you are a membership-based organization)

  • Marketing director

Note that you do not usually share your non-executive compensation policy with your employees — it mostly exists to ensure that you are paying them properly. As is the case with businesses, nonprofits do not want to show all of their cards to their employees in case they want to negotiate compensation.

Pro Tip: When the IRS evaluates your nonprofit’s annual report (aka Form 990) and Form 1023, it looks at your highest paid employees to determine if you are spending a "reasonable" amount on their compensation packages. Therefore, fair compensation is not just to keep your employees happy; it is also a legal requirement — at least for your top employees.

Recruitment & Hiring

Implement policies to govern the hiring and onboarding process. That way, you can recruit motivated, talented individuals who stick around for the long haul. 

As far as recruitment goes, consider:

  • How to make recruiting for diversity a priority

  • What platforms to post the job description on

  • Who handles the job listing and resulting applicants

  • How many rounds of interviews to perform

  • Whether or not to perform background and reference checks

Once you find the perfect candidate to hire, and they accept the job, it is time to onboard them. To start, draft a tailored onboarding plan that explains: 

  • Who to meet

  • What HR policies to read

  • What department-specific policies to read

  • What tasks to complete every day for the first few weeks

Training

Training is such a large topic that it deserves its own policy. Fair compensation alone is not enough to keep employees around. Some employees want opportunities to learn more about their field. Otherwise, they stay stagnant in the same role for years.

Address these questions in your training policy: 

  • How often will you provide industry training?

  • Will you host workshops internally or outsource them?

  • Will you fund industry certifications?

  • Will you fund degrees if employees want to go back to school part-time?

  • Will you let employees expense books that they read about professional development?

We touched on this topic a little in the employee manual section, but you cannot know what training to offer if you do not have open discussions about what your employees want. That is one reason why regular performance reviews are important. At a minimum, you should have one-on-one reviews once or twice a year to talk about how they are performing and what else you can give them.

hr-policies-for-nonprofit-organizations-essential-policiesOliver is excited to implement some of these essential policies!

Conflict of Interest

One particular gray area that can cause a lot of problems in the public eye as well as within a nonprofit is conflict of interest. The classic example of a conflict of interest is when a board member benefits from the success or failure of an organization. 

Conflicts of interest can extend past this specific example to include:

  • A prolific donor engaging in practices that go against your principles

  • A board member sharing your organization’s donor list with another nonprofit

  • A volunteer taking on a task that involves sensitive information and then providing that same service to a similar nonprofit

Pro Tip: Volunteer management software helps you organize, engage, and recruit unpaid staff. It can also help you manage their assigned tasks so that the above scenario does not happen.

Whatever the case may be, your organization needs to have a clear-cut action plan to address any conflict of interest. But you do not want to just be responding to these issues; you also need to prevent them. Draft a policy that clearly states what employees, members, board directors, donors, and volunteers can and cannot do in affiliation with your organization. Make sure that they receive a copy of this policy when they first join.

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Final Thoughts

HR policies are one of the most important parts of organizational management. They provide, in writing, a detailed outline of how to handle every aspect of employee behavior. 

If you review your HR policies regularly to take into account any feedback that your employees have given you, then you can reduce employee turnover by making them feel heard.

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FAQ

💡What are HR policies for nonprofit organizations?

Nonprofit HR policies include information about how to govern employees, ensuring smooth operation. Find out more. 

🔑 What HR policies should a nonprofit have?

Every nonprofit should have HR policies that cover these topics: employee handbook, compensation, recruitment and hiring, training, and conflicts of interest. Find out more. 

📝 What does a nonprofit employee handbook include?

A nonprofit employee handbook includes information about performance expectations, terminations, departures, schedules, and ethics. Find out more.

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