For decades now, the nonprofit sector has been struggling to be taken seriously. Part of that struggle is to be able to provide competitive wage and benefit packages that can attract people to the nonprofit sector on career paths, not simply as temporary way stations to better-paying jobs in the corporate and government sectors. A crucial component of that package is benefits—retirement and health. If policy-makers fail to recognize and address the needs of nonprofit employers and their 12.8 million employees, the damage to the sector will be serious and long lasting.
Nonprofits as Small Businesses and Small Employers
Among the various counts of the uninsured, 30 million according to President Obama’s recent speech to Congress, are a good number of poorly paid people working for nonprofits, particularly the smaller organizations in the U.S.
Remember that 93 percent of 501(c)(3)s had annual revenues in 2007 of less than $1 million; 73.2 percent of filing public charities had revenues below $300,000; 60.8 percent of (c)(3)s actually filing 990s and 78.7 percent of all registered (c)(3)s had revenues less than $100,000. Public charities are predominantly a sector of small and very small employers. What are nonprofits with revenues and assets that low? They’re small businesses—except that their missions are public service, not profit, their deliverables measured in people helped and communities uplifted.
For for-profit and nonprofit small employers alike, providing and affording health care coverage has become the number one challenge.
Among all business firms, small business employers have the most difficulty providing and affording health care coverage, based on the findings of the Kaiser Family Foundation’s 2009 survey of 3,188 randomly selected public and private firms with three or more employees. The research shows that when it comes to being able to provide insurance, size matters:
- Small employers (with 3-9 employees) are the largest group of employers (59.5 percent), yet combined account for only 8.3 percent of all workers—and only 4.8 percent of all workers covered by some sort of health benefits.
- Midsized employers (with 10-24 workers) represent 23.4 percent of employers, accounting for 9.5 percent of all employees and only 7.1 percent of insured workers.
- For the largest of all employers (firms with 5,000 or more workers), it’s just the opposite: while only 0.2 percent of employers, the largest employers account for 34.2 percent of all workers and 37.7 percent of covered employers.
How are small employers dealing with health care coverage? Some 98 percent of large firms in the Kaiser survey (employers with more than 200 employees) offered health benefits, but for firms between 3 and 199 workers, only 59 percent provided health benefits (down from 68 percent in 2000); for firms with 10-24 workers, only 72 percent offered health benefits, and for 3-9 workers, only 46 percent (down from 57 percent in 2000).
The Cost and Coverage Challenges Facing Small Nonprofit Employers
Why do so many small employers—and increasing numbers of them—not offer health insurance coverage? No surprise, two-thirds of Kaiser survey respondents say it is the soaring cost of health insurance. Nonprofit employers suffering from constrained charitable and government revenues during a deepening recession are no less cost-challenged in providing benefits, and again, remember that the vast majority of nonprofits are small employers:
- Less than three-fourths of executives of Illinois arts agencies surveyed in 2005 reported having access to a health insurance plan, though some one-fourth reported that those plans had no value for in their total compensation, presumably meaning that the employers did not contribute to the plans.
- Only 58.1 percent of nonprofits surveyed in 2006 surveyed by the Idaho Nonprofit Development Center offered health insurance to their full-time employees.
- A Boston Foundation study of Massachusetts nonprofits published in 2009 found only a little over half of nonprofits with budgets of less than $250,000 offered employees health benefits, and they reported paying 20 percent more for single coverage and 22 percent more for family coverage compared to larger nonprofit institutions.
Only 46 percent of the small nonprofits (less than $500,000, apparently budget size) responding to the regular ”soundings” of the Johns Hopkins University Listening Post Project offered health benefits to their employee