8 HR Best Practices for Small and Medium-Sized Nonprofit Organizations

Nonprofit organizations should employ HR best practices just as strictly as for-profit companies do. But the reality is that nonprofits have unique considerations and challenges that make developing an effective human resource strategy more difficult to achieve. 

This is especially true for small and medium-sized nonprofit organizations. Nevertheless, your nonprofit can take advantage of technologies and services to strengthen its HR processes, while also using your mission and culture-based values to your advantage. 

Ready to get started? We’re going to walk you through some HR best practices that will improve HR efficiency and effectiveness for nonprofits. 

Why do nonprofits need HR management?

If your organization has employees, it needs HR management—simple as that. As soon as you take on one employee, you’re subject to strict federal and state labor laws that offer protection to both parties. This applies even if you only take on unpaid volunteers.

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Free to use image sourced from Pexels

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If you pay your nonprofit employees, you need HR to manage payment and taxes. This should be in alignment with your state or country’s laws. But even if you don’t pay wages, you’ll need to collect confidential information from any volunteer you recruit. 

For instance, when you recruit a volunteer, you’ll need to collect their phone number, address, health-related information, and other sensitive data. This data must be stored and handled by HR in line with data compliance laws. 

Beyond administration, HR management also handles your employee lifecycle from recruitment to retention. HR initiatives, then, are integral to your nonprofit organization’s culture and employees’ overall satisfaction. 

Some of the following best practices will explore HR’s employee-centered initiatives in more depth.

8 HR best practices for nonprofit organizations

Define strong organizational goals and objectives

Nonprofits are inherently mission-based. But without concrete goals and objectives, it’s easy to lose direction and focus. For nonprofits to achieve broad mission statements such as “ending animal cruelty” they need to delve deeper and create specific, attainable goals and objectives to guide their activities.

This is where HR comes in.

HR can draft goals that establish a clear path toward the achievement of your mission. A helpful approach is to make those goals SMART—an acronym that stands for specific, measurable, achievable, relevant, and time-based.

By setting strategic SMART goals, you give donors, investors, and employees a much clearer idea of how you’re going to achieve your mission. As a result, they’re more likely to support your cause.

Do you employ both paid and volunteer staff? Do some of your team members work remotely? To make sure everyone is always on the same page, share those SMART goals through a safe, easy-to-access employee communication and collaboration platform. 

Refine recruitment strategies to attract better talent

According to the most recent bi-yearly census research, 60.7 million Americans formally volunteered in 2021—that’s around 23% of the population. But despite the improvement, every nonprofit knows that this figure doesn’t tell the full story.

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Free to use image sourced from Unsplash

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Volunteers are the heart and soul of your nonprofit organization—but acquiring and retaining them is a constant struggle. Without the lure of a competitive salary or career progression to rely on, nonprofits can find themselves short of reliable, high-quality volunteers. 

But there’s one thing that nonprofits can capitalize on: their mission and culture. 

Create an impactful mission statement that potential candidates will resonate with. Try to communicate what fuels your organization’s activities and why it’s so important. In doing so, you’re more likely to attract candidates—either paid or volunteer—who are equally as passionate about your cause. 

Not only will passionate employees put more effort and enthusiasm into their work, but they’ll stay longer, too. 

You can also attract candidates using your company culture. Sell how much more relaxing, flexible, and friendly your organization is in comparison to a corporate environment, and emphasize the big focus you have on promoting good mental and physical health in the workplace. 

Ensure compliance with employment laws and regulations

Guaranteeing legal and regulatory compliance is one of the key HR best practices for nonprofits. Any organization needs to understand and adhere to federal and state labor laws. In the U.S., this includes the Fair Labor Standards Act, the Occupational Safety and Health Act, and the Family and Medical Leave Act. 

If your organization also operates overseas, you’ll need to familiarize yourself with any local laws and regulations around employment. UK charities, for example, will have to adhere to the Charities Act and the Charities Commission. 

A key HR responsibility is to create and enforce internal company policies that align with regulations. These should cover aspects such as anti-discrimination, health and safety, leave, drug and alcohol use, bullying, and data handling. Should these policies be broken, a disciplinary process will be in place to manage the situation.

Failing to comply with laws can land your nonprofit in legal, financial, and reputational trouble. But as compliance can be fairly complex to navigate, it tends to require the attention of experienced HR personnel. 

For nonprofits that cannot build an experienced internal HR team, working with HR consultants and legal professionals can help you understand, implement, and manage compliance. Alternatively, you can use reputable HR outsourcing services.

Implement cost-effective employee development programs

High employee turnover is a recurring problem for nonprofits. This is in part because of the limited opportunities for career progression and advancement. But that doesn’t mean that nonprofits can’t invest in employee development.

You might not be able to offer tuition reimbursements for undergraduate degrees, but there are plenty of low-cost ways to incorporate employee development into your nonprofit. You can even access training and development materials for free.

Nonprofitready, for example, is an organization that provides nonprofits with over 500 completely free learning resources. This includes free online courses, videos, and downloadable guides on everything from nonprofit accounting to fundraising, marketing, and governance. 

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Screenshot sourced from nonprofitready.com

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You could also set up a mentoring program in which one of your senior staff mentors a new employee. Or, you could create your own learning materials—such as videos and guides—and upload them onto your staff portal. 

By upskilling your employees, you can give them the opportunity to challenge themselves, take on more responsibilities, and move into different nonprofit career paths.

Improve employee satisfaction with benefits and incentives

Another reason why employee turnover at nonprofits is so high is due to the fact that these organizations aren’t often able to offer hefty salaries. To tackle this, you can look into offering benefits and incentives to your staff.

In lieu of a competitive salary, you can show employees how much you value their hard work through:

• Health insurance.
• Performance bonuses.
• Paid sick days.
• Retirement and pension benefits.
• Covered travel expenses.

Once you’ve established which specific benefits and incentives you want to implement, you’ll need to streamline their management for your HR team. To this effect, you may want to use a payment management system, this will help you manage all of your payments efficiently, from your suppliers to your staff. 

Systems like this reduce manual data entry, enabling you to pay your staff accurately, on time, and in alignment with country-specific tax regulations. With their wages, bonuses, and cash benefits guaranteed to be paid on time, you can improve employee satisfaction and keep your workers engaged.

Foster a positive work environment by promoting DEI

Human resources play a critical role in the cultivation of a positive, inclusive work environment. They establish your organization’s cultural values, employ people who align with these values, and work to make sure that these values and expectations continue to thrive.

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Free to use image sourced from Pexels 

HR can promote diversity, equity, and inclusion (DEI) by:

• Establishing and enforcing clear DEI policies.
• Highlighting and removing hiring biases.
• Raising awareness of harmful biases and stereotypes in the workplace.
• Recognizing and celebrating cultural and religious holidays.
• Offering DEI training for employees.
• Actively advocating for DEI causes.

Integrate HR technology for efficient nonprofit operations

Limited budgets and a lack of technical expertise can make nonprofit organizations wary of adopting efficiency-boosting technologies. But in the face of challenges such as high employee turnover, payroll complexities, and legal compliance, HR technologies can streamline internal operations to better help you achieve your mission.

For example, HR technologies can benefit nonprofit organizations by eliminating inefficient paper processes. We’ve mentioned payment management systems already, which can automate accounts payable and accounts receivable processes alongside bank reconciliation. But HR technologies have many other uses beyond finance and accounting.

Companies such as Sage offer HR solutions that include attendance monitoring, time tracking, and performance management. So, from your desktop or mobile device, you can view your team’s availability, manage vacation and sick leave, and even prioritize daily tasks to reduce overworking. You can do all of this—and much more—without having to touch a scrap of paper.

And while specific HR tech such as this is essential, nonprofits can also benefit from having a comprehensive digital landscape that includes other tools, too. For example, deploying project management software such as Asana and Trello can allow nonprofits to integrate their HR functions with the rest of their operations, ensuring everything is aligned with their broader mission.

Screenshot taken from Sage.com

Prepare a crisis management and contingency plan

An HR crisis management and contingency plan mitigates risks in the event of an emergency or disruption. This could be anything from a natural disaster or pandemic to a cyberattack, data breach, or technical malfunction. 

HR has multiple responsibilities here: risk mitigation, crisis response, crisis management, and contingency. Essentially, HR needs to detect and minimize potential risks, aiming to resume normal business operations as soon as possible, with minimal damage.

This is a lot for HR to take on. Some areas, such as cybersecurity, will require specialized knowledge that might not be immediately available. Enlisting the support of specialist professionals can help you devise a comprehensive crisis management and contingency plan that protects your organization. 

Start streamlining your nonprofit HR today

Your people are your greatest asset. They’re the face of your organization and the communicators and drivers of your big-picture vision. This is why so many HR best practices revolve around creating a culture in which employees can thrive. 

HR best practices involve compliance, adherence, and streamlining of administrative tasks. But at the core, HR is an employee-centric activity that focuses on promoting DEI, investing in employee development, and ensuring that employees are respected and valued in the workplace.