Traditionally, HR departments in not-for-profit organizations were primarily involved in recruiting, hiring, and occasionally intervening in disciplinary or conflict resolution matters. However, today's HR staff often take on much more, including administering benefits, providing employee orientation and training, drafting and updating policies, ensuring regulatory compliance, and overseeing payroll. This expanded scope of responsibilities can be overwhelming, especially for nonprofits with limited resources.
If your organization finds itself understaffed and overworked, outsourcing HR tasks can be a viable solution to alleviate these burdens.
Before deciding to outsource, it’s important to identify which HR functions can be delegated. Focus on labor-intensive tasks such as employee benefits management and compliance requirements. Partnering with a specialized firm can elevate your organization’s professionalism and efficiency, as these firms often have more tools, contacts, and time to secure affordable healthcare insurance and retirement plans.
A primary motivator for nonprofits to outsource HR tasks is cost reduction. Conduct a cost-benefit analysis, potentially with the help of your CPA or financial advisor. Even if outsourcing comes with a higher price tag, the investment may be justified by the increased availability of staff to focus on mission-critical initiatives.
One drawback of outsourcing is the potential loss of control over certain functions. Some HR tasks may require an intimate understanding of your organization’s culture and history, which an external provider may lack. Additionally, consider the impact on your current HR staff and ensure you have the support of management and your board of directors before moving forward.
When selecting an HR outsourcing provider, it's crucial to conduct thorough due diligence. Key questions to ask prospective providers include:
Additionally, inquire about their rates, whether hourly, by the job, or on retainer, and understand their billing procedures. Lastly, consider consulting with your attorney to review the contract.
Ideally, you'll find an HR partner that aligns well with your organization's needs. However, it's essential to establish a monitoring system to track the effectiveness of the partnership. Be prepared to make adjustments as needed.
For further advice on outsourcing HR tasks and exploring other cost-cutting measures, feel free to contact us. We're here to help streamline your operations and support your mission.
The HoganTaylor Nonprofit team of business advisors and CPAs is comprised of former CFOs, controllers, and industry experts with extensive experience providing the guidance organizations need to lean forward again in their leadership. If you have any questions about this content, or if you would like more information about HoganTaylor’s Nonprofit practice, please contact Jack Murray, CPA, Nonprofit Practice Lead.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.