Why Times of Chaos Can Be The Best Time To Prioritize New Financial Solutions

Today’s nonprofits face significant levels of turmoil:

• Government funding cuts and delays paired with stagnating levels of donations are bringing high levels of financial uncertainty. 

• Ongoing workforce shortages and employee burnout are contributing to persistent staffing issues. 

• Policy changes, executive orders and shifting political tides are resulting in unparalleled atmospheres of uncertainty for many nonprofits.

Yet now … during this time of crisis … is exactly when nonprofits should prioritize innovative solutions such as working with UST to help put their organization on more firm financial footing.

Unemployment Claims Can Be A Significant Liability For Nonprofits

Many nonprofit groups fund unemployment claims by paying into their state’s unemployment insurance system.  But participating in that pool often means a nonprofit with a steady employment record may  be subsidizing the higher unemployment claim experience of businesses with higher levels of employee turnover.

Instead, nonprofits could work with UST Workforce Solutions by taking advantage of the 501c3 unemployment tax alternative.  Choosing that solution means the group would be responsible only for the direct costs of their own unemployment claims.

The financial difference can be substantial.  Recent research placed the cost of the average unemployment claim in the U.S. at $7,070.  But nonprofits working with UST averaged only $4,700 per claim during the same time period.

Continued Savings By Paying Lower Amounts For Your Nonprofit’s Claims

Especially in turbulent times, uncovering significant savings can be important for nonprofits.  But working with UST isn’t just about one-time savings.   Take the issue of benefit overpayment within the state pools as an example.

From July 1, 2021, through June 30, 2024, the U.S. Bureau of Labor Statistics reports 13.97% of state unemployment fund claims were paid in error.  What was the result? Companies overpaid $4,715,000,000 in unemployment claims.

Unfortunately, the impact of unemployment claims isn’t just an issue for big corporations.  Nonprofits shoulder a big portion of these costs.

In 2024 alone, UST worked with 89 nonprofits to audit their unique unemployment liability situations.  The result was $1,921,886 in potential savings across those 89 organizations.  That’s an average of $21,594 savings for each group.

Another key to ongoing savings is the expertise available to each UST member.  It’s common sense that not all unemployment claims are valid.  In fact, some experts point to nationwide “protestable” claim rates as high as 43%.

But where do you turn if you want to protest a former employee’s unemployment claim?  After all, most nonprofit staff wear many hats.  But “unemployment claim expert” usually isn’t one of them.

As a member of UST, you’re assigned a state-specific claims representative for each claim.  These experts are well-versed in the latest unemployment laws and claims filing protocols.  This knowledge brings results because UST program participants win 86% of their protestable unemployment claims.

The combination of unemployment claim savings and expertise has helped more than 2,200 nonprofits take better control of the cost of their unemployment claims.  Take a look at the case study featuring a summer camp with many seasonal employees to learn more about the advantages.  (Link to Children’s Country Week Association case study at: https://www.chooseust.org/wp-content/uploads/2024/02/UST-Case-Study-Childrens-Country-Week-Association.pdf)

Unemployment Reserve Funds Can Become An Asset For Your Nonprofit

If your nonprofit doesn’t pay into your state’s unemployment insurance fund, where does the money come from if you need to pay a claim?  UST makes it easy by helping your group build an unemployment reserve fund.

With more than 40 years of experience in helping nonprofits strategically cut costs on their unemployment claims, UST understands how to set up unemployment reserves so organizations don’t run into challenges when they switch over to their program. 

Because groups are building reserves based on their unemployment history – rather than the potentially higher unemployment track records of other companies – the money needed to fund these reserves is generally much lower than the nonprofit would pay into their state unemployment fund each year.

Then, as time goes on and a nonprofit successfully manages their unemployment claims, that reserve fund continues to grow.  Eventually, many groups find that their unemployment reserves need only modest contributions each year.  This saves the nonprofit money by significantly reducing the amount they pay to fund their reserves.

At the same time, their unemployment reserves are an asset for the nonprofit.  During challenging times such as COVID, many UST members were able to tap into their unemployment reserves which helped them continue funding important programs so their organization could confidently bridge the financial difficulty.

Want to learn more about the factors that led other nonprofits to work with UST?  Take a look at this case study featuring an organization working with senior citizens to see the group’s initial concerns and the factors that convinced them to give UST a try.  (Link to an online page featuring the case study from the recent mailing.)

Building Long-Term Financial Health By Embracing Change

Most nonprofit leaders would agree that organizations who successfully survive times of turmoil do so by adapting to their new environment.  Groups who keep following the same path … never changing their approach in light of evolving circumstances … often don’t fare as well.

Today’s challenging nonprofit circumstances make reinforcing your organization’s financial picture more important than ever.  Making the most of innovative approaches that can deliver initial savings – paired with building valuable reserves over time – could be a key to creating long-term financial stability for your group.

But most importantly, the time to start is now.  If you’re interested in learning more about the money your nonprofit could save by working with UST, go to chooseust.org/savings to request your Free Savings Analysis today.

SOURCES:

“Unemployment Insurance Benefit Payment Integrity, United States Department of Labor, 5/29/25

https://oui.doleta.gov/unemploy/improp_payrate.asp