October 03, 2012

There Are Worse Things You Could Do…But Not Many

Everyone knows that employees are your most valuable asset. Your relationships with them—both individually and as a working group—determine the productivity and success of your agency.

But many nonprofits put relationships with employees at a lower level of importance than relationships with donors and other funding sources. Ultimately this common mistake undermines the entire organization and detracts from your mission because it creates a counterproductive work environment.

To begin fixing these botched relationships, and celebrating your employees for who they are and what they do, we’ve put together the top 3 things NOT TO DO.

1. Playing favorites: We all know you have favorite employees. Whether they’re your top performers, best friends, or just people you really like for the job, don’t treat them any differently than you treat the rest of your employees.

Better yet, treat the rest of your employees the same way you treat your favorites.

2. Not giving employees a forum for voicing suggestions: If you want employees to know that they’re valued members of your organization encourage them to make suggestions to improve your operations or the way that their job is handled.

More importantly, take the time to recognize and implement the best suggestions. This will motivate employees to improve working processes and implement new activities.

3. Lack of communication with employees: Open and easy communication helps build the strongest relationships within your agency.

However you accomplish it, make sure that you’re present and easy to get in touch with when employees want, or need, to talk.

Connect with us on Facebook, on Twitter @USTTrust, or on LinkedIn and tell us what other things you would add to the list.
September 30, 2012

(Tele)commuting and Nonprofit Employees

More and more, virtual offices are becoming the norm for nonprofits as gas, office space, and traffic jams put a priority on your work time and budget, not to mention employee morale. But what’s the best way to determine who would be a strong telecommuter? And how do you know that your agency is ready to take the leap into a virtual office space? More than that, how do you manage a virtual office from your physical location?

According to an article by The NonProfit Times, studies about telecommuting have shown that virtual offices work better for some organizations than others based on employees, manager expectations, and employee performance of day-to-day operations.

Telecommuting has not proven to be a success in situations where managers are skeptical of, or hostile to, the very idea, says The NonProfit Times. But Jill Dotts of the American Heart Association explained at the recent Association of Fundraising Professionals 49th International Conference that if you are looking to develop a virtual office space, you should look for employees who possess the following traits:

  • Top performers
  • Results focused
  • Strong communicators
  • Disciplined
  • Self-directed/ Self-driven
  • Entrepreneurial
  • Proficient in technology
  • Proficient in administration
  • Possessing a sense of urgency about the work they do and the overall organizational goals

Employees who are able to organize their day, achieve much more than is expected of them, clearly communicate what they did and why it mattered, and believe in your organization’s mission as much as you do are most likely to work well from home.

Dotts also suggested that before you think about offering a virtual office to any of your employees, you should think about preparing a ROI analysis and baseline to determine the actual benefits of having telecommuting employees. Included with this she recommends that you shore up an infrastructure to make their telecommute feasible, establish a program and standards that could apply to any future telecommuting employees, align performance objectives with their time in the virtual office, restructure communications to accommodate telecommuting, and prepare for changes in implications for management and your overall organizational culture.

Read the full article here.

But this still leaves us with the question of how to manage a virtual office. How do you ensure that your employees are doing their best, and meeting organizational goals when they’re working from home?

Much of it comes down to communication and trust. If you can’t rely on an employee to communicate well and meet organization objectives, telecommuting might not be a good solution for your nonprofit. But, if you believe that your employees are going to continue to be high-performers from their virtual office, and they have shown that they can maintain strong communication portals from another location, go ahead and start planning for your virtual offices!
September 27, 2012

The Value of a Professional Reading Group at your Nonprofit

Time is critical at every nonprofit we’ve ever seen, so we understand that managers and front line staff often don’t have time to keep up with the latest, newest, and most recently groundbreaking changes to the sector.

But falling behind can mean you miss valuable ways to help meet the needs of those you serve.

In fact, our guess would be that everyone at your organization probably agrees that staying up-to-date is important for the continued success of your agency. But how do you manage the flow of information while still being waist-deep in meeting the ever-growing needs of your nonprofit community?

Bridgestar suggests starting a professional reading group. A suggestion UST's whole Division of Nonprofit Research heartily agrees with.

But, simply starting a professional reading group doesn’t guarantee its success. And, if you’re not sure of the reaction that managers and front line staff will have to a reading group that requires them to read and digest more information than they already are, start with small steps.

  1. Send interesting articles to those that they are most relevant to. If you read an article about new nonprofit hiring trends, don’t send it to the entire staff, send it straight to those who work on your hiring staff or have a vested interest in sector hiring trends. If you send an article that’s only relevant to one part of your organization to everyone, people will stop paying attention to the articles you send. It’s like crying “wolf.”
  2. Offer a weekly reading list that compiles information about your nonprofit sector to those that indicate an interest. An optional reading list is a no-pressure way to get people in the habit of reading professional materials on a regular basis, and is a great step toward building your reading group. It also sparks discussion among your staff about the included articles which can lead to greater group productivity and knowledge.
  3. Offer incentives to employees who are reading a relevant book and are willing to share their new knowledge with the group. As straight forward as this is, it might be one of the most difficult steps to achieve since it requires reading longer, and often more complicated, material that must then be shared with the larger group. But if you find people willing to do it, capitalize on it. Even if they’re too busy to come in and share with a large group all at once, ask them to write out their thoughts and include them in the employee newsletter or at a regularly scheduled meeting.
  4. Ask employees to contribute articles and information they think is valuable! This again capitalizes on your employee’s involvement, and encourages them to become involved in the continuing education of your agency. By asking for their input you also interest a larger group of people and expose yourself to new reading materials and sector news without having to continually hunt things down.

If these steps show promise and you’re getting a good response from enough people, suggest to your employees that a reading group should be formed to help your nonprofit stay on top of new developments and innovations.

If scheduling is an issue and causes your employees (or volunteers) to balk, offer several different reading group times that allow employees with different schedules to still meet with each other once a quarter or more often if there is time. Or try pre-recording group input and making it available online. This is the time to be creative in getting people on board and involved because the more your employees invest, the more they'll be able to tout the strengths of the reading group to employees who haven't joined yet.

Bridgestar suggests that when you finally start your professional reading group you:

  1. Gauge interest before springing a reading group on your employees.
  2. Keep the group small; aiming for only 5 to 8 people at each meeting. Think about recording the meetings and making them available to people who didn't attend the meeting.
  3. Have group participants report back on what they’ve learned. And how it's impacted their work.
  4. Build your organizations library and refer to it often. Even if you save everything on a bookshelf in your break room, make sure that your employees are able to access the information library. If it's kept up-to-date, you'll make an even bigger impact on your staff.
September 26, 2012

New Mexico Seeks Unemployment Insurance Fund Fix

In late March, New Mexico’s Gov. Susana Martinez reactivated a long-dormant council in hopes of fixing the state’s rapidly shrinking unemployment insurance (UI) trust fund. Since 2009, the fund has dropped from more than $500 million to $60.6 million.

Like many states desperately trying to save their funds from insolvency, legislators in New Mexico passed a bill last year that would have slashed unemployment benefits and hiked the premiums businesses still in the tax-rated state system would have to pay. Martinez, however, eliminated the higher premiums and signed a new bill this year that approved lower rates through 2013.

Senator Gerald Ortiz y Pino (D- Albuquerque) is warning, though, that the state will soon have to borrow from the federal government at a high interest rate because employers only paid $197.8 million into the fund last year. And with more than 40,000 employers drawing from the fund, the remaining $60 million won’t go far.

For nonprofit agencies still in the state system, there are other options, such as leaving the state to join a Trust, like the Unemployment Services Trust (UST), that can help save more money and gain greater predictive control over yearly budgeting.

In fact, New Mexico nonprofits that leave the state system and join UST save an average of $3,483 a year.

To learn more about your opt out alternatives, visit or sign up for the an upcoming Exclusive Nonprofit Savings webinar.

Read the full Albuquerque Journal article here.
September 24, 2012

5 Things Your Nonprofit Should Know About Unemployment Insurance

Last week our partners over at the Maine Association of Nonprofits (MANP) published the following article in their e-newsletter and on their blog. We're excited to share this with you because it does an excellent job of breaking down the top 5 things that Maine every nonprofit should know about unemployment insurance.

And, because keeping unemployment costs low is vital to so many agencies across the U.S., we've added state-by-state information for taxable wage bases, and a general overview of the unemployment insurance program that applies to all states.

MANP Help Desk FAQ: 5 Things Your Nonprofit Should Know About Unemployment Insurance

by Molly O'Connell

We get a variety of questions related to unemployment tax – also known as unemployment insurance – and encourage nonprofits to be proactive in learning about this system.

What is Unemployment Tax?

>The MDOL provides a helpful overview of the program, and this summary: “Unemployment is an insurance program providing temporary, partial wage replacement to workers who are unemployed through no fault of their own. The program is funded by Unemployment Taxes paid by employers based on the amount of wages paid for covered employment. The Unemployment Tax is paid on the [taxable wage base] an employer pays to an individual in a calendar year.” (Read our overview or see what your state's taxable wage base is.)

Is Your Nonprofit Liable?

501(c)3 nonprofits are exempt from federal unemployment taxes, but may be liable for state contributions if they meet something called the “4 for 20″ provision. This provision is triggered when four or more individuals are employed on the same day for 20 weeks in a calendar year, though not necessarily for consecutive weeks. It is important to note that who is considered “employed” for these purposes is not always straightforward – see #4 below.

Why You Should Consider Coverage Even If You’re Exempt

While many nonprofits in Maine are very small and potentially exempt, MANP encourages all nonprofits – as a best, ethical practice – to pay into the unemployment tax system or alternative coverage (see #5) to protect their current employees. At the very least, your employees should be made aware of whether or not you provide unemployment coverage. Unemployment compensation is a safeguard for people – and our communities as a whole – against the potential economic and emotional domino effects of losing a job.

Why Independent Contractors May Still Be Considered Employees

There are different rules and tests used by government agencies to determine independent contractor status, because different agencies are responsible for separate aspects of law. For the purposes of unemployment insurance, the Maine Department of Labor uses something called the “ABC test”, which makes it sound simple, but is more complicated when applied to real situations. The ABC Test establishes criteria that an work relationship must meet in order to for the services of that individual to not be considered employment. The three parts of the ABC Test relate to employer control/direction of the worker, place(s) of business or courses of business, and proof that the worker is independently established in the trade. A nonprofit may have to pay unemployment taxes even if IRS or Maine Revenue Services determine that, for income tax purposes, individuals may be independent contractors. Nonprofits should be familiar with this FAQ resource on Independent Contractors, and with this guide about Independent Contractors and the ABC test.

Cost-Saving Alternatives

The Unemployment Services Trust (UST) provides an alternative to paying into the Maine unemployment tax system, and can be a cost-saving option for nonprofits, especially those with more than 10 employees. Through UST, agencies directly reimburse the state only for the claims of their former employees, rather than paying the state unemployment insurance tax which covers all Maine employees. (You didn't think we'd take this one out, did you?)

This post does not constitute official or legal advice. A version of this article originally appeared on
September 19, 2012

Georgia Unemployment Rate Remains Dismally High

For the 59th month in a row, the Georgia Department of Labor has announced that the unemployment rate, at 9.3 percent, remains higher than the national average. Only 7 states, including Washington D.C., have a higher unemployment rate.

For nonprofits, this isn’t the worst of the news.

After falling below 9 percent in April for the first time in more than 3 years, the rate has begun a steady climb upward again, negatively affecting nonprofit employers throughout Georgia by simultaneously increasing cost and need. Compounded by the state’s depleted unemployment insurance trust fund and an outstanding loan balance of more than $742 million that is still owed to the federal government, nonprofits are facing a higher possibility increased unemployment taxes in 2013.

Because Georgia quickly depleted its unemployment insurance (UI) trust fund, the struggle to provide benefits has hurt employers and jobless workers as the state has made large cuts to benefits and steeply increased the overall unemployment costs paid by employers.

Further adding to the coming financial strain, the interest on the federal unemployment trust fund loan cannot be paid from the unemployment tax fund and must instead be paid from other state revenues, causing further financial stress for legislators.

To pay it, the Georgia legislature passed SB 347 earlier this year, which, in addition to cutting jobless benefits and increasing unemployment benefits paid out by employers, includes provisions to:

  • Assess employers an unemployment insurance tax on the first $9,500 of each employee’s wages, up from the current $8,500, beginning January 1, 2013.
  • Assess employers a solvency tax, called the Statewide Reserve Ratio surcharge, whenever the balance in the state’s unemployment fund falls below a specified level.
  • Reduce the number of weeks jobless workers can collect unemployment benefits from 26 to a period ranging from 14-20 weeks depending on how high the statewide unemployment rate is.

While this legislation makes Georgia one of 11 states that have cut jobless benefits in the past year by reducing the duration and level of payouts and by restricting eligibility, the legislation may ultimately harm nonprofits specifically as it forces unemployed workers to turn to nonprofits for aid, while also increasing the amount that agencies must set aside to pay for unemployment costs of their own.

For nonprofit organizations still in the state tax system, there are other options available though. Since 1972 nonprofit employers have had the exclusive ability to opt out of the state system and reimburse directly the dollar-for-dollar costs of only their own unemployment costs.

By safely leaving the state’s pooled liability system and paying only for their own unemployment costs, many nonprofits- particularly those with 10 or more employees- can save up to 50 percent off of their UI taxes and gain greater predictive control over yearly budgeting. In fact, Georgia nonprofits that leave the state system and join UST save an average of $14,321 a year.

Learn more about your nonprofits money saving alternatives, or sign up for an upcoming webinar to learn how UST can help your nonprofit reduce SUI costs.

Read the original Savannah Morning News article.
September 16, 2012

5 Questions Every Employee Wants Answered

According to Ragan’s HR Communication News there are five questions that every employee wants—and needs—to have answered to be feel confident and successful in their position within your nonprofit organization.

For you, answering these questions is critical to creating an invested workforce that sparks the creativity and drive that your mission thrives on. Answering the questions also gives employees a sense of who they are and where they fit in your agency, which leads to more productive, and innovative, workdays.

  1. What is expected of me? This question may seem obvious, but if you don’t have a clearly developed job description that outlines how each position fits into the overall organizational goals, and how the position is critical to reaching your mission goals, employees may feel that they’re just floating in the void. By clearly laying how a position fits into your nonprofit goals, you allow your employees to actively engage in making your nonprofit a successful place to work. If you haven’t yet, read this to learn more about developing strong employee objectives.
  2. How am I doing? Don’t structure your nonprofit so that employees are only getting feedback on the things they do wrong—it’s disheartening and keeps people from extending themselves. Make sure that managers are regularly scheduling meetings with the employees they oversee to give regular feedback on how the employee is doing. And ensure that when employees do something awesome they hear about it! Employees want to have regular feedback (both good and bad) and if they don’t get it from you, they may find another nonprofit that does offer them the opportunity for growth.
  3. Where do I stand? Schedule a formal evaluation of each of your employees every year. An expansion of question 2, this allows you to discuss their accomplishments, opportunities for further growth and improvement, and the challenges that they’ve dealt with. This annual assessment meeting also allows you and your employees to review what is expected of each of them and how this has changed in the past year.
  4. How can I improve? As we’ve said before, you must give employees the opportunities to gain more professional skills and understanding if you want them to stay with your nonprofit for the long haul. It’s vital to keeping employees happy. But, offering opportunities for improvement also allows you to further the mission of your nonprofit. By strengthening every member on your team, you become more able to meet new situations head on.
  5. How can I grow and challenge myself? A more focused version of question 4, this question allows you to re-recruit employees by reminding each other why the fit works. Find out where they want to go in their career and determine how this fits in with your organizational assessment of their abilities. Whether this means you add to an employee’s daily duties, you move them up in the organization, or whatever else works for you, re-recruiting employees challenges both you and them to create a high-performance, high-quality workplace that is even more focused on your mission.

Answering these questions is only part of a strong employee retention policy though. What other steps do you take to keep employees engaged and excited about your nonprofit?

Read the original Ragan article here.
September 10, 2012

California’s Unemployment Insurance Interest Payments Pull from Disability Funds

In 2009, the California unemployment insurance trust fund became insolvent. Now, almost four years later, the state continues to borrow heavily from the federal government and other state accounts to cover the deficit and make payments on the ever-increasing interest.

In California, where a 10.8 percent unemployment rate is reported with general good feelings, unemployment insurance presents more than one challenge to nonprofits as the state’s UI fund continues to fall deeper into insolvency. With plans to borrow more than $312.6 million from the state Disability Insurance Fund, how will nonprofits remaining in the state UI system counter the hefty bill coming at them?

While there is no good answer, nonprofits which have 10 or more employees are urged to consider leaving the state system to become reimbursing employers who only pay for the costs of the claims submitted by their former employees.

Because the financial recovery continues to trudge along for nonprofits, many of which cannot expect to return to pre-Recession levels of funding for 10 or more years, according to a recent study, it is important that nonprofit leadership continue to successfully assess the options available to them.

Nonprofits: What We’ve Learned

When the state UI fund ran out of money in 2009, during the height of the financial crisis, California had an unemployment rate of 11.3 percent—the fourth highest in the country—and about 1.75 million unemployed workers. Today, the rate remains still high at 10.8 percent.

But many nonprofits made it through the Recession relatively unharmed and in fact were able to raise their hiring 5 percent over a three year span as more help was needed by beneficiaries.

Although a high number of small agencies were forced to close, and many medium-sized agencies had to merge with larger organizations, nonprofits are used to tightening up their belt loops and surviving tough financial times to continue providing benefits to their community.

How can this knowledge be used to help California and other states facing high UI costs?

With the largest unemployment insurance deficit in the nation, cash-strapped California has already borrowed from the state Disability Fund once before, but little is being done to systematically change the way that the state releases funds for UI. (Both loans must be repaid within four years of their initial borrowing date, but no way to repay them has been presented.)

Counter-intuitive though it may be, by removing your nonprofit from the state UI tax system and instead paying only for your own UI claims you allow your agency to do more with the money you have and for the mission you’ve committed to. This action, in a small way, also calls for UI reforms across the nation as more nonprofits leave the state system for the cost savings found in self-reimbursing.

To learn more about how you can leave the state system and become a reimbursing employer, visit or sign up for an upcoming webinar.
September 09, 2012

Generosity in America: Driven by Location, Gender, and Income

Having made huge waves in headlines across the United States, the recent report “How America Gives” has nonprofits and donors alike reassessing how they interact with charity, and where charitable funding is most likely to come from.

Take a moment and ask yourself about your perceptions of who in America gives the most from before this study came out.

Would you have been mostly likely to assume that the very rich gave the most, or that the middle class and working poor gave the most? If you guessed the first, you, like many of those culling through the study results, would have been in for quite a surprise. Throughout America, those who live among the needy, who see the specific needs of others on a daily basis, are more likely to give a higher percentage of their median discretionary income to charitable causes.

In short, the study found that:

  • The very rich aren’t the most generous donors. People who live segregated from the needs of others are less likely to donate to charities because they have no reason to think about it and see no significant impact from their gift.
  • Tax incentives that promote giving make a significant difference in how much charities are able to pull in. Charities in states that incentivize giving reap far greater donations across the board.
  • Religious giving changes the entire landscape of charitable donations. Highly religious areas tend to give more to charity, and churches, than less religious areas.
  • There is an association with politics. The eight states that ranked the highest for fundraising voted Republican in the last presidential election, while the seven lowest-ranking states were overwhelmingly Democratic. See the politics of giving breakdown.
  • Older women are far more generous than older men, but women are not asked to give as often as men are.* Although women make less than their male counterparts on average, for every $100 donation given by an older, affluent man, a woman of similar age, income and other characteristics donates $256.

Perhaps most importantly the study leads to the suggestion that as the nation continues to recover the cities and states with the most generous residents may be in a better position to offset unemployment and other financial setbacks.

Find out how generous your city is, and see how your state stacks up in terms of overall giving.

*This was found by researchers at the Women’s Philanthropy Institute at Indiana University’s Center on Philanthropy. Read the full findings of how women interact with philanthropic causes here.
August 22, 2012

North Carolina UI System Provides Example of What Not to Do

When the federal government established the Unemployment Insurance (UI) system after the Great Depression, it was designed to support workers who, “through no fault of their own” lost their jobs. Established to ensure that the economy could recover in the face of massive job losses, the state UI system is supposed to be a safety net.

The system is far from perfect though.

For instance, the system is intrinsically flawed for many nonprofit employers who face little to no job-turnover and who remain a part of their state system. Featured in a recent report, the North Carolina UI system has provided one of the strongest examples of why eligible 501(c)(3)’s should consider opting out of their state UI system, as allowed by federal law.

After borrowing more than $2.4 billion from the federal government to meet their UI responsibilities after their UI Trust Fund became insolvent during the Great Recession, North Carolina has begun leveraging their high interest payments on state UI participants.

Like many states which were unable to meet their UI obligations, the burden of reimbursing the federal government for the full loans falls on all employers within the state, whether or not any of their former employees are currently collecting unemployment benefits.

No state reached insolvency overnight though.

Long before the recent recession, states resisted “indexing” or raising their unemployment taxes from year to year. Things were good, the economy was stable — why should they make adjustments? But while employers enjoyed low taxes, in the long run they were being set up for a much bigger fall in the future. And that’s when the Great Recession hit. Not only had states failed to maintain an adequate UI cushion, employers would be double-hit by the recession in having to lay off workers to cut costs, and then pay higher unemployment taxes as a result. According to a 2010 Government Accountability Office report, “Long-standing UI tax policies and practices in many states over 3 decades have eroded trust fund reserves, leaving states in a weak position prior to the recent recession.” Not that states weren’t warned. Even in North Carolina, the Budget and Tax Center reports that it “conducted a thorough analysis of the unemployment insurance system in March 2007, before the start of the Great Recession, warning of the long-term unsustainability of the system as implemented and suggesting reforms.”

More than ever, systems today must be built that can better weather economic downturns and large, prolonged layoffs. Adequate funding levels must be re-attained so that states rely less on the federal government for funding support to meet benefit payments. A system must also be built which maintains its ability to support the economy with wage-replacement levels that are adequate in supporting workers seeking work.

While innovative programs must continue to be introduced to help place jobseekers in new positions, an overhaul of many state UI systems would better support nonprofit employers who remain in their state tax-rated UI system whether they are too small to opt out, or if they feel safer in the state system.

However, because 501(c)(3)s have the exclusive right to opt out of their state UI system in favor of becoming a reimbursing employer that pays directly for former employees’ UI costs, many already experience a greater savings because they aren’t paying for the state’s interest on federal loans, or subsidizing larger employers’ UI costs.
August 21, 2012

New York Tells Employers They’ll Have Lower UI Interest Assessment Surcharge…

…Leaves out the Part where Employers are still Paying for the State’s Insolvent UI Trust Fund.

In December 2007 when the Great Recession officially began, it’s doubtful that anyone could have predicted how quickly New York’s unemployment insurance (UI) trust fund would become insolvent. But, a mere 24 months later, in January 2009, the state began borrowing heavily from the federal government to cover the increasingly high cost of unemployment benefits being paid throughout the state.

Now, more than $4 billion in debt is being leveraged on employers as interest payments once again come due.

As required by law, all employers within the state UI system will be required to pay a portion of the interest by way of an “Interest Assessment Surcharge” (IAS) that New York began charging last year. And, although the principal balance won’t come due for some time still, employers who remain within the state UI system will have to pay the surcharge- based on their total taxable wages of Oct.1, 2010 to Sept. 30, 2011 multiplied by the IAS rate of 0.015 percent- no later than 30 days after the date of their bill.

While the surcharge will be capped at $12.75 per employee, the increase will result in higher overall unemployment costs.

For nonprofit agencies still in the state system, there are other options, such as leaving the state to join a Trust, like the Unemployment Services Trust (UST), that can help save more money and gain greater predictive control over yearly budgeting.

In fact, New York nonprofits that leave the state system and join UST save an average of $12,465 a year.

To learn more about your opt out alternatives, visit or sign up for an upcoming webinar at

For all questions about how the surcharge will affect your nonprofit if it remains in the state UI system, call the Employer Accounts Adjustment Section of the UI Division at (888) 899-8810.
August 20, 2012

State Unemployment Funds Could Have Been Better Managed Says Report

At the end of July the National Unemployment Law Project released a blistering analysis which found that much of the financial burden facing 30 states which will have to pay back nearly $1 billion by the end of September could have been avoided with better planning.

According to the analysis, had each of the states forced to borrow from federal funds enacted more responsible financing of their funds leading up to the Great Recession, fewer states would have had to slash the safety net created for jobless workers through unemployment insurance benefits. The report further details how excessive tax giveaways and breaks for many employers left many states with depleted unemployment trust funds that were unprepared for even a modest downturn.

Citing evidence from 1995 to 2005 in which 31 states reduced employer contribution rates by at least 1/5, the report reveals that while employer tax rates fell to a historic low in the decade leading up to the recession, the combined balance in all state trust funds was half the amount experts recommend.

Funds were so abominably low, Michigan and New York even had to begin borrowing from federal funds before the recession had even officially begun.

The trend continues today. As of yet, few states have made significant changes to the structure of their unemployment insurance funds which would prevent another mass borrowing or would allow them to reinstate a fully funded unemployment trust fund in the next few years. Only Alabama has done enough to predictively repay the federal loan within the next few years.

For employers that have paid increasingly high unemployment taxes the news can come as a shock.

Although tax rates for employers within the state unemployment insurance system have increased substantially since 2009, the higher payments have done little to cover the increased benefits payments and the high level of interest being charged on federal loans, much less build up the level of reserves available.

To combat the continued depletion of funds, many states have even shifted the blame onto those found jobless by reducing benefits and eligibility across the board. Not surprisingly, each cut has severely jeopardized the capacity of unemployment funds to insure families and stabilize the economy during swift downturns, which has led to further increases in tax payments made by employers in the state system.

Thankfully, nonprofits with 10 or more employees have the exclusive ability to opt out of the state UI tax system and reimburse the state only for the benefits paid out to their former employees. This protects the benefits paid out to nonprofit employees, while simultaneously reducing the operational costs of unemployment, which allows nonprofits to do more for their mission.

For a complimentary overview of how UST could help your nonprofit reduce unemployment expenses and lower improper payment rates, please sign up for an upcoming webinar, or fill out a Savings Evaluation today.
August 15, 2012

Connecticut Ready to Collect Special UI Assessment Fees

In December 2007 when the Great Recession officially began, it’s doubtful that anyone could have predicted that over the next several years almost 35 states would face insolvent unemployment insurance (UI) trust funds.

For Connecticut, and its pool of steadily increasing jobless workers, it took just over two years.

And now, three years after reaching insolvency, the price of the state’s debt is being leveraged on all employers remaining in the tax rated state system.

Although the principal balance of the $632 million loan isn’t yet due, employers are already being called on to cover the interest payments for the debt. For nonprofits remaining within the state UI system, their organization can expect to add approximately $1.70 per thousand dollars of taxable payroll, or about $25.50 per full time employee to their 2012 UI taxes.

As required by law, all employers within the state tax system will be billed directly for this assessment on or about August 1, which must be paid by August 31. Paid outside of the normal state UI system, this additional fee will add on to the gross overpayment of more than $162 million made by Connecticut in the past three years.

For nonprofits still in the state system, there are other options, such as leaving the state to join a Trust, like the Unemployment Services Trust (UST), that can help save more money and gain greater predictive control over yearly budgeting.

By reimbursing the state dollar-for-dollar the claims of only their own former employees, nonprofits that join UST are able to stop overpaying in the state tax system and do more with their money. In fact, Connecticut nonprofits with 10 or more employees can expect to save an average of $10,484 a year after joining UST.
August 09, 2012

Colorado Nonprofits Helping Pay $600M in Unemployment Deficits

Colorado has turned to old school forms of cash generation as they prepare to manage a bond sale. Designed to lower unemployment costs and help the state’s unemployment insurance system meet its financial obligations, the sale will generate more than $640 million through the Colorado Housing and Finance Authority.

Currently the Colorado Unemployment Insurance Trust Fund has a negative balance of more than $600 million after the recessions of 2002 and 2008.

In a joint announcement by Democratic Gov. John Hickenlooper and Republican state Treasurer Walker Stapleton, the men explained that the bond sale will eliminate additional UI solvency surcharges that Colorado employers have paid since 2004. In the short term, Colorado employers still within the state system will see savings starting next year of up to $120 per worker.

Businesses will repay the bond over time though and can expect fewer savings with each year.

For nonprofit agencies still in the state system, there are other options, such as leaving the state to join a Trust, like the Unemployment Services Trust (UST), that can help save more money and gain greater predictive control over yearly budgeting.

In fact, Colorado nonprofits that leave the state system and join UST save an average of $6,300 a year.

To learn more about your opt out alternatives, visit or sign up for an upcoming webinar “Exclusive Nonprofit Savings”.

Read the original MSN Money article here.
August 06, 2012

Seeking CPAs: Key Questions to Ask Before Issuing a Request for Proposal

Written by Barry Omahen, CPA, Managing Partner, and Stephanie Kretschmer, Marketing Manager, Lindquist LLP

If your organization is considering having an audit for the first time or changing auditors, it is wise to exercise due diligence when obtaining bids for services. With the continued focus on transparency and accountability by government agencies, donors, parent organizations and the general public, the selection of a qualified certified public accountant (CPA) has become increasingly important.

Quality audit and accounting services help nonprofit organizations safeguard their assets; improve internal controls and efficiency; complete timely and accurate returns to comply with federal and state regulatory filing requirements; and stay on top of regulatory requirements, accounting standards and industry best practices.

Before you request bids, your organization needs to answer a few key questions:

  1. Who is going to be responsible for the selection process? Will it be an individual (Executive Director, Director of Finance or Controller) or a group (Board of Directors or Audit Committee) Does your organization have an Audit Committee and, if not, would it make sense to create one?
  2. What services do we need? Define your organization’s needs and create a list of required services. Getting clarity on exactly which services are needed will help ensure that you are comparing apples to apples at decision time.
  3. When do we need these services? Consider your year-end deadlines, filing deadlines and scheduled meetings of the Board of Directors. How quickly after year-end do you close your books? When do you want the financial statements presented? You will need to communicate any timing expectations to prospective bidders.
  4. Upon which criteria are we going to base this decision? Consider: prior experience with not-for-profits; organization, location, size and structure of the firm/individual; understanding of the work to be performed, including ability/plan to complete services according to the organization’s timeframes; experience of references; price; industry knowledge and approach to communications. Some organizations develop a weighting system to help ensure they are objective when making the decision.
  5. What is our process and time frame for making a decision? Determine whether you are going to allow candidates to come onsite to meet with accounting staff or wait until you have received proposals and identified finalists for the decision-makers to interview—or both. Outline when you are going to issue a request for proposal, how long candidates have to ask questions or request an onsite visit, when candidates need to submit a proposal, when you expect to interview finalists, and when you expect to reach a decision.

Gone are the days of calling a couple of CPAs to say, “Give me a bid,” and reaching an agreement with a handshake. Today’s organizations need to be conscientious about their selection of a CPA. Conducting a diligent and thorough selection process not only satisfies key stakeholders, but ultimately helps protect the organization.

Barry Omahen, CPA, is the Managing Partner of Lindquist LLP, a certified public accounting firm specializing in audits of not-for-profit organizations and their related employee benefit plans. Barry’s chief responsibilities include supervising Lindquist LLP’s day-to-day operations and the firm’s quality control review process. Email Barry at

Stephanie Kretschmer, Marketing Manager, helps the professionals in Lindquist LLP’s four West Coast offices attract and retain clients. She oversees firm communications and has responded to hundreds of requests for proposal in her career. Email Stephanie at

To learn more from Lindquist's nonprofit-focused CPAs, watch the recorded webinar: "Beyond the Numbers- How to Review your Organization's Form 990."
August 01, 2012

UST has Upgraded the Hearings Process for All Members

We are pleased to announce that TALX Corporation, the third party unemployment claims administrator for UST, has changed its hearings process from “attend per request” to “attend all” for all UST members.

After reviewing data about improved win rates and how the education provided during the process of working with a hearing representative helps further reduce UI costs, the Trustees of UST elected to add this enhanced level of service on June 4th.

A part of the Appellate division, hearing representatives at TALX have an average of 12 years unemployment claims experience and receive a significant amount of training on the nuances of individual state laws and requirements. As such, utilizing a hearing representative provides UST’s members with substantial leverage while planning and preparing for a claims hearing.

Available as a consultant before a claims hearing, and as a representative during the hearing, the hearing representative will assist UST members in:

  • Determining proper witnesses
  • Gathering and submitting documents to the right stakeholders
  • Explaining the hearings process
  • Reviewing with members the type of judge has been assigned to each hearing
  • Preparing members for what to expect during the hearing
  • Addressing direct questions to witnesses
  • Objecting to the Claimant’s cross examination of witnesses
  • Cross examining the Claimant
  • Making closing statements to the judge on behalf of UST members

Although members can elect to not have a hearing representative work with them throughout the claims process, data has consistently shown that while employers who represent themselves have a 57.4% win rate, employers who use a TALX hearing representative throughout the claims hearing process increase their win rate to 72.3%.

While in the past it was necessary for members to request a hearing representative, this upgraded service is now the UST standard and is a benefit of your UST partnership at no additional charge.

For questions or further information about these changes, please contact your TALX Account Manager Garry Koch at or at (614) 658-3007.
July 27, 2012

10 Tips to Minimizing your Unemployment Costs: Tip 10

Tip 10: Work with an Unemployment Trust.

Working with an unemployment trust like UST can provide you with a partner that works with you at every stage of the unemployment process. Whether you need help with unemployment claims, appeals, hearings, charge audits, best practices, unemployment reports or client education, a trust can help cut down on costs and administrative burden.

For example, UST helps nonprofits to:

1) Evaluate whether they should opt out of the state unemployment tax system

2) File the paperwork with the state to become a "reimbursing" employer

3) Set up an account reserve just for unemployment costs

4) Provide web reporting with the tools that help you stay abreast of unemployment activity

Unemployment trusts like UST can also offer guidance, preparation and representation at hearings to help you win a claims appeal for improper charges.

By working with the Trust's claims monitor, especially at the initial level of the claim, an unemployment trust can help you avoid penalties, loss of appeal rights, and it can keep you from being charged for benefits improperly collected. Working with a trust can make the difference in saving your agency thousands of dollars in claims costs each year.

Trusts are best for nonprofits with 10 or more full time employees who have somewhat stable employment. Those with seasonable employees or volatile unemployment claims are best staying in the state unemployment tax system. Read more about your options as a nonprofit.

To find out if your agency would benefit from opting out of the state unemployment tax system and working with UST, request a Savings Evaluation today.
July 26, 2012

10 Days to Minimizing your Unemployment Costs: Tip 9

Tip 9: Consider re-employment strategies!

Helping transitioning employees find another job rapidly after a staff reduction, position elimination, or other involuntary, non-misconduct separation can help your nonprofit control the duration of non-protestable unemployment claims.

Because these claims typically result in the longest duration and highest total benefit payout, they can be the most costly for your organization.

An unemployment claims monitor or Trust can help you by providing one-on-one job coaching, e-learning, and other key outplacement elements
July 25, 2012

10 Days to Minimizing your Unemployment Costs: Tip 8

Tip 8: Weigh the consequences of partial employment, systematic layoffs, and independent contractors before you use them!

It should be self-evident, but too often employers act impulsively and don’t review all of their options before laying employees off, which ultimately raises their UI tax rates, or their cash on hand if they are a reimbursing employer. Layoffs can cost thousands of dollars in unemployment benefits.

Know when employees are eligible for partial weeks of unemployment, how a systematic layoff will affect your contribution rate, and whether independent contractors are a good idea for your agency.

In the case of layoffs, helping severed employees find jobs benefits the employer and employee.

Independent contractors may file for unemployment, and the employer needs to be able to prove he or she is not an employee of your company.

If you work with an unemployment trust or claims administrator, they can provide you with a listing of state-specific guidance that can highlight how helping severed employees find a new job will benefit both them and your nonprofit, as well as helping you properly document that independent contractors are not an employee.
July 24, 2012

10 Days to Minimizing your Unemployment Costs: Tip 7

Tip 7: Appeal benefit collections when it is warranted.

An appeal is your request to the state to assign a hearing officer to review the facts of a particular case because you believe the eligibility rules have not been properly applied. Appeals aren’t something you should do by default though.

Appeal only if you adamantly disagree with a decision allowing the claimant benefits, and be prepared to present the facts and evidence that show why your former employee should not be allowed to collect.

If you work with a claims administrator or unemployment trust, you should be prepared during an appeal to give all documentation and preparation to a hearings representative who will help your organization determine who should be contacted for the hearing, and how their testimony will work with your case.
July 23, 2012

10 Days to Minimizing your Unemployment Costs: Tip 6

Tip 6: Be prepared for hearings.

All unemployment benefits hearings require first-hand testimony as to the facts and events under consideration. By proactively documenting all employee actions and disciplines, you collect the information you will need for a hearing. By having all documents readily available during the hearing, you avoid relying on hearsay evidence which is generally not persuasive enough to win your hearing, and may not even be considered, depending on the case.

If you work with a claims administrator or a trust like UST, you may have access to your own hearing representative. Working with a hearing representative will also help you prepare for the case by providing you with someone who is not only on your side, but has many years of experience in working through claims hearings.
July 22, 2012

10 Days to Minimizing your Unemployment Costs: Tip 5

Tip 5: Know the difference between voluntary resignations, discharges, and lack of work claims.

In almost every state, a voluntary resignation, especially for non-compelling reasons, usually disqualifies the employee from receiving unemployment benefits.

But there are significant exceptions because some states may allow benefits for a quit with “good cause.”

Here are some good things to remember:

  1. In a voluntary quit, the burden of proof rests with your former employee.
  2. A discharge for misconduct is legally defined as willful misconduct connected with your work that resulted in a tendency for damage to your nonprofit interests.
  3. A discharge in which you initiate the termination puts the burden of proof on your nonprofit. Make sure you have the right documentation on hand for at least 18 months.
  4. Always avoid the words “unsatisfactory performance” in cases where the employee is able to perform the job, but is negligent of performing their duties. This term has a legal definition of an employee who is unable to perform the job, and will likely result in benefits awarded to the claimant.
  5. In discharges due to misconduct, be prepared to provide documentation of the final incident that led to the discharge.

And never, ever forget, lack of work claims are the very reason unemployment insurance exists. They provide benefits to employees who, through no fault of their own, are separated from work. But to get any award, claimants must be able to work, available for work, and actively looking for work.
July 19, 2012

10 Days to Minimizing your Unemployment Costs: Tip 4

Tip 4: Track unemployment costs and budget appropriately.

Track claims, monitor potential liability and review past history to forecast budgets for unemployment taxes. Be familiar with the base period and benefit year in your state and review tax information to ensure budgets are adequate. By better understanding how your unemployment tax costs are affected by layoffs, you can plan for the future and make sure you have the cash on hand for fluctuations in staffing that may affect your future costs.

If you are a reimbursing employer, meaning you have opted out of the state unemployment tax system to reimburse the state for your own UI claims, you should very carefully manage unemployment claims and make sure you aren't paying for any that are unwarranted. Also, you can catch errors by the state if you know how much you should be paying. If you work with a trust like UST, your claims representative should be doing this for you and will be able to walk you through any questions.
July 17, 2012

10 Days to Minimizing your Unemployment Costs: Tip 3

Even if your nonprofit doesn’t have a dedicated human resources team, it’s important that your human resources practices are up to snuff. Best practices include:
  • Performing detailed reference checks before hiring new employees.
  • Consistently using (and documenting) progressive discipline.
  • Enforcing all rules and policies uniformly. Even the smallest deviations undermine your credibility as a fair nonprofit employer.
  • Follow an employee’s progress from the moment they are hired.
  • Perform thorough talent assessments before hiring or promoting employees to alleviate problems down the road.

There are online performance assessment tools that you can use to help screen employees before hire, and assess after hire. For example, UST members have access to pan, an online aggregation of hundreds of assessments from more than 50 of the industry’s top test publishers. These online assessments include employee acquisition, evaluation, and development solutions to help reduce costs in the hiring and recruiting process for UST members, as well as decrease turnover and its related costs.
July 16, 2012

10 Days to Minimizing your Unemployment Costs: Tip 2

Tip 2:  Compose effective written warnings.

Every manager, HR generalist, and employee from here to Timbuktu knows that warnings are an act of progressive discipline. But what many of these same people fail to remember is that warnings are an act of progressive discipline that effectively ensure an employee understands what is expected of them.

In the case of an employee discharge, state unemployment agencies look for warnings to determine if your former employee was discharged for misconduct. Effectively clear, and non-judgmental, warnings help you meet this burden of proof with concrete evidence, when written to include:

  • The violation
  • The action that must take place for the situation to improve
  • The consequences to the employee if this standard is not met
  • The employee’s action plan and comments
  • The signature of the employee, a witness, and the issuer
July 15, 2012

10 Days to Minimizing your Unemployment Costs: Tip 1

But, you can directly impact your bottom line with a few strategic approaches to reducing your unemployment costs.

Tip 1: Document Everything.

Effective documentation is absolutely crucial to reducing your unemployment costs because, as the employer, you will often carry the “burden of proof” with the state.

Although good documentation can also help in matters related to the EEOC and employment litigation, documentation for discharges and voluntary quit situations is different. Namely you want to be extremely careful of the language you use in documenting a voluntary separation or discharge because the state has specific legal definitions of terms such as “unsatisfactory” work. And you will want to be careful that you are protesting claims that do not constitute good cause in a voluntary quit. These could include quits to attend school, get married, change careers, staying at home with children, or job abandonment.

Also, make sure that your organization is keeping good records. Whenever you provide policies and documentation to employees, be sure to obtain a signed acknowledgement of policies and changes to policies, and keep the receipt for at least 18 months.
July 11, 2012

State UI Overpayments Are Marched into the Spotlight

We’ve said it before and we’ll say it again: Unemployment overpayments are a HUGE problem for nonprofits still paying into the state unemployment insurance system. Nonprofits aren’t the only ones who now know they’re losing money due to poor governmental oversight.

On Monday, CNN Money published an in-depth review of government overpayments within the UI system and their findings. Although the findings do recognize the value of UI benefits to those receiving them properly, improper payments are simultaneously distressing for those who oversee limited budgets and work on shoestrings.

Digging through reports from the U.S. Department of Labor, the Campaign to Cut Waste, and individual state records, CNN found that an estimated $14 billion in benefits were paid out improperly during fiscal 2011. That’s more than 10 percent of all the jobless benefits paid out last year.

But some states did far worse than the national average. For instance, in Indiana, which has become known for bad spending habits, more UI payments made were made in error, or improperly, than were made correctly. Indiana actually made more improper payments than proper payments…to the tune of at least $1,743,109,894 over the last three years.

The blame doesn’t only fall on one or two states though. Unemployment Insurance has the second highest rate for improper payments of any federal program.

But, finally, something is being done. Sort of. A little bit.

The U.S. government and many states are trying to recoup their losses and avoid future overpayments.

CNN found that the majority of the UI benefits improperly collected go to check cashers who either aren’t actively searching for a job, were fired or quit voluntarily, and those who continue to file claims even after they’ve returned to work.

Although people do deliberately defraud the system and use fake documents or identities to collect benefits, the current focus is on establishing preventative methods to recover the money that has been lost.

The crackdown won’t help your nonprofit though.

Despite nearly half of all improper payments being deemed “recoverable,” the money will be returned to the federal government. There is no indication that the money will be returned to the employers who were overcharged, or that they’re tax rates will be positively affected by the discovery of errors.

Only a quarter of the estimated actual recoverable payments have been recovered so far. For the most part, when the government discovers someone was overpaid, it often issues a letter asking the claimant to return the extra funds. But the repayment can be waived in many states if the UI beneficiary can show that they’re in financial distress and didn’t actively intend for the error to occur.
July 09, 2012

More States Cut From Unemployment Benefits

At the end of May more than 200,000 people in eight states had their federal extended unemployment benefits end. They join more than 180,000 jobless workers in 19 other states who had already seen their benefits end in 2012.

Extended benefits are being cut across the country as average unemployment rates drop. To stay on extended benefits, the average unemployment rate for the past three months must be at least 110 percent of one of the rates from a comparable three-month period in one of the last three years. For each of the states affected, their average unemployment rate is currently lower than at any of the same three month periods in the last three years.

While the drop in unemployment rates will be a positive change for the overall economy, for the hundreds of thousands of job seekers who have already exhausted their state and federal unemployment benefits, the cuts don’t bode well.

So what do the nearly 400,000 job seekers who have been cut from extended unemployment benefits mean to the nonprofit sector?

Putting more strain on at-capacity nonprofits, the newest round of cuts will mean that more job-seekers will be turning to nonprofits for job re-training and employment support.

The newest round of unemployment cuts also means that state and nonprofit programs that lend aid to the needy will be the last place for the long-term unemployed to turn.
July 04, 2012

Federal Red Tape May Be Slowing Down Innovative UI Job Programs

Earlier this year Congress approved a deal to allow up to 10 states to develop demonstration projects which would allow businesses to hire unemployed workers and essentially pay their salaries with money from the unemployment insurance fund.

Though the system has gotten off to a rocky start, many hope it will soon pick up.

As part of the program, the 10 states which are picked to participate would be allowed to use UI funds to subsidize employer-provided training or to pay employers that hire unemployment insurance beneficiaries. Although atypical, some lawmakers see the UI job program as a quick way to increase the number of those going back to work.

According to an article published in Stateline Daily, George Wentworth of the National Employment Law Project believes that the program’s intent is to ensure that the program participants “get good jobs with good wages and that there is a good chance they can retain the job permanently.”

However, a good intent and the lack of state applicants may show that the innovative program is a far cry from the easy fix that some lawmakers see it as. New Hampshire has already indicated that it probably won’t bother to apply because the considerations for inclusion are too difficult.

Other states have similarly indicated that they will wait to see what the federal government and their fellow states do before considering an application for the waiver.

For 501(c)(3) agencies that can opt out of the state UI system but have not yet done so, the program’s possibilities are problematic though. Repurposing funds from their taxes to pay for the salaries of for-profit agencies, the waiver program could undercut the operating budgets of many nonprofits.

Now, more than ever, it is important that nonprofits with more than 10 full-time employees explore their options for leaving the state UI system to self-reimburse for unemployment claims. To learn more about how UST can help your nonprofit stop subsidizing the salaries and unemployment benefits of other for-profit companies.

Read more about the current holding pattern at Stateline.
June 26, 2012

In-House Employee Development

In almost every nonprofit setting, it’s pretty safe to say that leadership requires the most out of every employee to create the greatest possible impact on the governing mission. Whether this means that case workers take emergency calls from clients more than they are schedule to, or that an administrative assistant wears multiple hats as the social media coordinator, office manager, event planner, and even an intake specialist, continually changes. But, despite the great pressure nonprofits place on each employee to give their absolute best, employee development is often overlooked.

A recent Bridgespan Group survey has revealed that most nonprofits rank their ability to provide development and growth opportunities to employees as their fourth greatest management weakness overall even.*

The same survey went on to explain that a lack of employee development has become the “Achilles heel” of the nonprofit community. Because only 30 percent of nonprofits have created or sustained an agency-wide plan for employee development—and only 23 percent of those track its progress—the large majority of organizations don’t have a clear understanding of what skills they need for each position as their mission evolves. Many more don’t even have an idea of where that talent would come from.

To help you develop a plan to address future leadership gaps, Bridgespan put together a list of 52 free ways that nonprofit agencies can improve their internal employee development. Some of the easiet and most impactful employee development initiatives that they list include:

  • To prepare employees for positions of team leadership and management, have key employees lead monthly meetings
  • Allow potential future leaders to manage junior staff such as interns or volunteers
  • Organize and execute team building activities at monthly meetings
  • Allow key employees to represent the organization in professional or community networks
  • Ask employees you want to develop to participate in drafting portions of grants or business contracts to improve their business capabilities
  • Have staff participate in developing key budgets
  • Ask staff to organize initiatives throughout the organization or in the community

On its own, on-the-job development isn’t enough though. To foster truly effective options for employee and organization development, get your board involved with individual employees through the agency. And have each person who is involved with your development program—whether that is a board member or a developing leader—regularly assess what works best at getting employees ready so that you are more likely and more able to advance them within your agency.

*Rounding out the top 3 are communication of priorities, coordination across organization boundaries, and performance assessment and consequences.