Monetary Challenges in Nonprofits
Because nonprofit organizations rely solely on grants and charitable donations, nonprofits have less monetary funds available to devote to non-essential operating costs, such as employee development and retention initiatives. Some of the challenges that result in the inability to appropriately allocate funds to these superfluous initiatives include the following.
Inability to Compete with the Market – Nonprofit organizations often fall behind other companies in terms of employee development initiatives, thus resulting in turnover and decreased employee satisfaction or moral. Some of these shortcomings include the inability to provide tuition reimbursement, lack of compensation for awards or certifications achieved, professional development within the industry, bonuses for work well-done, or recognition for superior achievement.
Inability to Provide Equitable Compensation – Nonprofits also fall behind other competitive organizations because the limited funding often results in less appealing or lower compensation and benefit programs. While private sector companies are able to provide annual increases and bonuses, nonprofit organizations often struggle to maintain funding for a position altogether, let alone thinking about being able to increase the salary for said position.
Subpar Training Initiatives – The final monetary challenge that nonprofit organizations face is the inability to provide adequate training opportunities to promote employee professional development and continued growth within the position or industry. Employees need to continually feel challenged, so the inability to meet market standards with respect to continued growth will place the nonprofit at a disadvantage to motivating and encouraging employee development.
Although nonprofit organizations face these three challenges as a result of insufficient funding, there are many ways to increase an employee’s level of satisfaction and motivation to continue with the organization. The following two initiatives are low-cost alternatives to implementing extravagant compensation increases, employee recognition programs, and training initiatives.
Provide incentives to reduce absenteeism. The less an employee is absent, the more likely he or she is to stay with an organization, which increases the desire to continually grow with the nonprofit. This spearheads the likelihood an employee will leave the organization, but it also increases the employee’s desire to grow with the organization.
- Provide job rotation opportunities. Without having to provide monetary compensation for work well-done, provide temporary job rotation opportunities to increase employee development and understanding of the nonprofit. This also increases employee satisfaction and feelings of positive self-worth for the organization.