The Essential Role of HR in a Nonprofit | Donorbox

There are two prominent roles of a nonprofit human resources department. First, to pay the organization’s taxes and file IRS paperwork. Second, to ensure payroll is on time and all staff benefits are in working order. But beyond these key roles, nonprofit HR departments are important for so many more reasons! Read on to learn more about HR's significant role in nonprofits.

6 minutes read
The Essential Role of HR in a Nonprofit | Donorbox

nonprofit hr

Most small nonprofits do not have a separate department, but that does not mean the nonprofit HR department does not play an essential role. Recruitment, hiring, screening, and compensation are all parts of human resources. Each of these is necessary for staff and volunteers in a nonprofit.

Starting from policy and compliance to establishing a culture and getting the best talent out there for your nonprofit, nonprofit HR plays a very significant role. Their functions are critical to your organization and its progress. This article explains to you these functions as well as what HR should mean to your nonprofit.

1. What is Nonprofit HR?

nonprofit hr

There are two prominent roles of a nonprofit human resource (HR) department. The first is to pay the organization’s taxes and file necessary IRS paperwork. The second is to make sure payroll is paid on time, and all insurance coverage and benefits are in working order for the staff. Finally, HR is responsible for hiring, training, and evaluating staff and volunteers.

In many nonprofits, the role of HR is done by the executive director, board chairperson, or accountant. If the nonprofit is a larger organization, it may have a distinct HR department for staff to address.

2. Your Board’s Role

Like everything else, human resources for your nonprofit should start with a plan. It is best practice for your board to determine this plan at the start of your organization. When writing your organization’s bylaws, your board can detail legal staffing requirements. At the same time, they should be forming an idea of the work culture your nonprofit hopes to create.

Your board members may be business owners, lawyers, medical personnel, or stay-at-home moms, but it is best practice to have at least one member with HR knowledge and experience. These individuals will lead the board and Executive Director through all the steps in developing a solid human resource department and internal HR plan.

3. 7 Critical Functions of Nonprofit HR

hr for nonprofits

Regardless of the size of your nonprofit, hiring, training, and evaluating staff and volunteers are the most crucial role of HR in a nonprofit. The individuals working for your organization are what determines its success. It is essential to find the right people and help them succeed in their roles so your organization can grow.

3.1 Work culture

You may assume your first step in the hiring process is recruitment, but there are quite a few steps that need to be taken before you can start recruiting for any position.

Your hiring process should start with developing an organizational chart to visualize the roles and responsibilities of each staff member. This chart will likely change as your nonprofit grows, but it is the first step in determining whether your nonprofit will run as a top-down or flat organization. This org chart will shape the culture you create within your nonprofit.

Once the org chart is finalized, your HR department can start to create job descriptions for each role within your organization. When planning for each role, give as many specifics as possible to help screen for compensation and advancement.

3.2 Policy and compliance

Another essential step in the hiring process that must be finalized before recruitment begins is policy and compliance issues.

Small nonprofits can feel lost in this process, even with an HR board member. If your organization does not have a separate human resource department to help with this step, several online companies offer these services at affordable prices.

hr for nonprofits

These companies can develop or walk your organization through the creation of the following crucial documents:

  • Anti-discrimination policy
  • Sick Leave Policy
  • Non-Disclosure Agreement
  • Discrimination and Harassment Policy
  • Social Media Policy
  • Independent Contractor Agreement
  • Remote Work Policy
  • Bereavement Policy
  • HIPAA policy

3.3 Recruitment

Whether you are looking for staff or volunteers, recruitment for nonprofits can be challenging. Finding the right personnel is essential to keep your organization running. The Board of Directors will be in charge of finding an Executive Director. After that role is in place, the board will likely step back and leave additional staffing and volunteer recruitment up to the Executive Director themselves.

Newer nonprofits will have difficulty finding quality staff since the pay is lower than for-profits can offer. This may feel insurmountable, but nonprofits can provide more opportunities for developing new skills and advancing up the ladder. Because of this, it can be the perfect place for young people to get started.

Historically, nonprofits have used local media and other local organizations to find suitable staff. If your nonprofit finds recruitment difficult with these sources, local colleges, social media, and your own donors and volunteers may be another option for recruitment.

3.4 Hiring

When you are ready to hire employees, you will want to make sure your applications ask for all the information your organization needs. Applications you can find online will give you a general layout for your application, but your human resource department should define what information you will and will not include.

Hiring for a nonprofit may be trickier than many expect. Since salaries are lower, it is crucial to determine why job seekers want to join your staff. Younger job seekers may be an excellent option for most positions, but higher ranks will call for more experience.

human resource management in nonprofit organizations

Pro tip: When searching to fill these positions, you will want to learn why applicants have left their past jobs. Those who have left corporate jobs because of burnout may not be the best choice. There is a belief among for-profit employees that work with nonprofits will be less stressful, but with less staff, the reality is quite different.

3.5 Training and evaluation

Once you have found the right individuals to fill the positions, training and evaluating these employees is essential. Each role should have its own unique process that speaks to the needs of the department and the individual’s strengths and weaknesses.

If you created a detailed job description, you have already developed a blueprint for that role. Expectations for each position have already been laid out, so now you just have to teach the new employee how to reach their goals.

Evaluating individuals in these positions can be more challenging. Many organizations focus on issues that arise with employees but do little to address the successes. This focus on their weaknesses may make for an uncomfortable work environment and a high turnover rate with younger employees.

Nonprofits must find ways to train employees for success and help them step up the ladder when they are ready. The cost to replace employees is too much for most organizations, and unfortunately, lower salaries already put nonprofits in an unenviable position.

3.6 Compensation and benefits

If you are a smaller organization, you may hire an independent or full-time accountant to deal with your taxes and payroll. An accountant should be comfortable submitting your form 990 to the IRS and making sure payroll goes out in time, but a human resource department can make a difference when it comes to retaining employees.

human resource management in nonprofit organizations

Nonprofits are well-known for lower salaries, and with the cost of health insurance continuously rising, benefits are disappearing as well. HR departments find the right compensation and benefits that fit people’s expectations and your organization’s budget. We have written an article on nonprofit pay if you are having trouble determining an amount. Most nonprofit budgets require lower wages, but nonprofits can offer unique opportunities to their staff.

As a nonprofit, your human resource department should develop a compensation and benefits plan that excites younger job seekers. These individuals do not expect high pay but are looking for good work culture, skill development, quick advancement, and even remote work.

Pro tip: Since the pandemic, remote work has become a crucial employee benefit. Young mothers are ruling out companies that do not offer this option. As a nonprofit, your organization may be in the perfect position to offer this as a benefit for your employees. New technology has made this an affordable and realistic option for most nonprofits.

3.7 Managing staff and volunteers

Once again, volunteers are unique to nonprofits, but if you are a smaller organization, your staff may be entirely volunteer-based. On the surface, this volunteer staff may make things easier regarding payroll and legal requirements, but expectations for these individuals can often be more significant than what organizations receive.

In many ways, volunteers should be treated the same as paid employees. When recruiting and training volunteers, you will want detailed job descriptions to help find the right individual. Training will also need to be as in-depth. Non-discrimination and anti-harassment policies must also be established for volunteers, along with HIPAA and OSHA requirements.

hr for nonprofits

The difference between paid employees and volunteers will be in your organization’s expectations. Remember, volunteers are often busy with other things in their lives and have no obligation to your organization other than what they choose. While these individuals must be held accountable, you may have to lower your expectations and either hire paid staff or more volunteers to reach your goals.

Even with volunteers, you will likely face performance issues. When this happens, you must remember that not everyone will fit in their chosen roles or even with your organization. As a human resource department, it is your responsibility to move these individuals to another position or ask them to leave the organization entirely.


hr for nonprofits

A human resource department is not the first thing most nonprofits think of when they start their organization, but it can determine its success. A nonprofit is only as strong as the people who work for it, and without a well-planned work culture, your organization can get lost in the hiring process.

An HR plan is essential to following legal requirements and creating a blueprint of your organization in action. With a well-thought-out organization chart, detailed job descriptions, and training and evaluation processes for each position, your organization can reduce turnover and increase your budget.

Nonprofits offer unique benefits to job seekers, and your organization should keep that in mind when recruiting new employees. Do not let your lower budget discourage you from finding quality staff members. Build a vital HR process for your organization regardless of your size.

As your nonprofit continues to grow, you will want to learn more about successful fundraising ideas and management issues. Donorbox can help your organization with your online fundraising and give you tips and tricks to help you along the way.

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Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.

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