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Why a Not-for-Profit Should Address the Tax Reform Impact on Their Total Compensation Offerings

No, I didn’t hit my head and wake up and realize that Not-For Profits (NFPs) now pay taxes.  However, as a result of the recent tax law changes, a substantial number of for-profit companies not only provided a one-time bonus, some were, also, quick to act and announced increases to:

  • Minimum wage
  • Salaries
  • Retirement benefits
  • Investment in training employees

NFPs were already faced with challenges in competing with their for-profit counterparts and the tax law changes did not help close the difference.  NFPs may have to take even a more critical look at their offerings and proactively address this issue. 

How should a NFP react at this point?

  • Review Total Compensation Offerings – The objective is to not compete head on with salaries and bonuses. Alternately, developing more attractive options surrounding non-salary related opportunities, such as PTO, schedule flexibility, low-cost benefits, and life-style total compensation packages, should be addressed.
  • Develop Alternate Retirement Plan Strategies – The goals of these changes is to provide higher contributions rates for longer-tenured employees vs. providing the same for level for all employees.
  • Refine Strategy of Across-the-Board Compensation Increases – With limited compensation budgets, considering the benefits of providing a more merit-based system vs. across-the-board increases, may be of value
  • Retention Bonus Plans – Although historically viewed as a giveaway, NFPs may consider the benefits of this strategy including some type of longer term retention component (e.g., 50% of the otherwise payable bonus would be deferred until retirement or some other future event).

My blog, in fall of 2017 discussed the need for a total compensation philosophy, and the impact of tax reform on their for-profit counterparts makes these issues an even more critical focus.

Please share your thoughts!

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Elliot N. Dinkin



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My blogs consider a variety of topics including: compensation, benefits,

retirement, management, sales and marketing. In addition to my blog, I

also actively utilize Twitter, (@ElliotDofCowden).  Feel free to Follow my blog today!