In the state of Michigan, top nonprofit groups including Washington-based Independent Sector, the Council of Michigan Foundations and the Michigan Nonprofit Association recently have been busy educating nonprofits on the new overtime regulations finalized by the U.S. Department of Labor .
Like other employers, nonprofits expect to see their administrative costs rise and are looking at ways to minimize the financial impact on the cost side of the business. With many operating on grants or contractual funding, the change will be tough to absorb, nonprofit leaders say, given that many of the grants are multi-year contracts with costs locked in and that the government has not signaled its intent to increase funding to maintain the same level of service provided by the nonprofits it funds.
At the same time, human service agencies and other nonprofits that rely on donations — and need to keep administrative costs low to show donors the bulk of their dollars are going to the cause — could see their fundraising impacted by the new rules. The new regulations greatly expand the number of workers eligible for overtime pay by increasing the annual salary threshold at which companies are required to pay overtime to salaried workers from $23,660 to nearly $47,476. Employers, whether nonprofit or for-profit, have until Dec. 1 to implement the new rules.
As costs go up, donors will see a higher percentage of the money they donate covering administrative costs, which won't be well-received. From my experience donors typically prefer to support programs that produce results they can see rather than operational and infrastructure costs for human service agencies. This will be a challenge and creative solutions will be necessary.
Like other employers, nonprofits expect to see their administrative costs rise and are looking at ways to minimize the financial impact on the cost side of the business. With many operating on grants or contractual funding, the change will be tough to absorb, nonprofit leaders say, given that many of the grants are multi-year contracts with costs locked in and that the government has not signaled its intent to increase funding to maintain the same level of service provided by the nonprofits it funds.
At the same time, human service agencies and other nonprofits that rely on donations — and need to keep administrative costs low to show donors the bulk of their dollars are going to the cause — could see their fundraising impacted by the new rules. The new regulations greatly expand the number of workers eligible for overtime pay by increasing the annual salary threshold at which companies are required to pay overtime to salaried workers from $23,660 to nearly $47,476. Employers, whether nonprofit or for-profit, have until Dec. 1 to implement the new rules.
As costs go up, donors will see a higher percentage of the money they donate covering administrative costs, which won't be well-received. From my experience donors typically prefer to support programs that produce results they can see rather than operational and infrastructure costs for human service agencies. This will be a challenge and creative solutions will be necessary.
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