How to Retain Nonprofit Employees Despite Budget Constraints

Today’s nonprofits face several challenges to achieving their long-term goals, from a notable decrease in charitable giving to issues related to board engagement. One of the biggest hurdles, however, is retaining talented employees for the long term.

According to RealHR Solutions, when your nonprofit successfully retains its employees, it can avoid institutional knowledge loss and save money on hiring. Your team can also grow its skills over time and drive greater results for its beneficiaries.

Of course, retaining employees is easier said than done, especially because most nonprofits must operate on a lean budget. In this short guide, we’ll cover a few best practices to help you boost your employee retention rate. Let’s begin. 

1. Foster a positive work environment. 

To improve retention at your nonprofit, begin by critically examining your work environment. Is it an atmosphere where all employees feel like they belong and are supported by leadership and their peers? Ensuring that your workplace supports employee well-being and success will go a long way toward helping retain your top talent.

After you’ve evaluated your own work environment, you may notice some things you want to improve. Here are some tips for doing so:

• Prioritize open communication. Transparency and openness are major tenets of a positive work environment. Ensure that you keep employees informed regarding progress on big projects, organizational changes, performance expectations, and more. For example, if your nonprofit decides to adopt new AI tools for better fundraising, ensure that everyone is on the same page about how you’ll make the most of those tools alongside human capabilities. Additionally, make sure communication at your nonprofit is a two-way street. Encourage employees to bring questions, concerns, and suggestions to their managers when needed.  
• Celebrate employee achievements. Employees need to know that their contributions to moving your mission forward are seen and valued by your organization. In addition to regular gratitude for their day-to-day work, celebrate employees’ key accomplishments. This can be done in several ways, from sending custom eCards to starting an Employee of the Month program to giving small gifts. Cater your recognition strategy to your employees’ preferences for maximum impact.
• Encourage collaboration. Working together is a fulfilling experience for employees that allows them to support and learn from one another. This is especially true when they partner up with peers or departments they don’t usually work with on a regular basis. For example, you may work on a project where you ask your major gift officers to collaborate with your marketing department to develop new solicitation materials.
• Help employees get to know each other. Everyone needs a friend to lean on in the workplace. You can help lay the foundation for strong workplace friendships by creating opportunities for employees to get to know each other. Some of these opportunities may naturally arise during the course of the workday, like cross-departmental projects. Others must be carefully planned, like outings to local museums or Friday happy hours.

Whether your team works in an office full-time or has embraced hybrid or remote work, these best practices can help you cultivate a positive, supportive work environment that employees are happy to be a part of. 
 

2. Offer non-monetary benefits. 

How you compensate your employees matters not only when you’re recruiting top talent but also when you’re working to retain talented individuals on your team. You need to demonstrate that working for your organization provides a wealth of benefits.

To walk the line between being a competitive employer and sticking to your budget, try taking a total rewards approach to compensation. According to Astron Solutions’ guide to employee compensation, this involves viewing compensation holistically and characterizing different elements of your compensation packages as direct and indirect:

• Direct compensation: Refers to all of the financial ways that an employer compensates their employees
• Indirect compensation: Refers to the ways an organization gives back to their employees without paying them directly

It may seem counterintuitive, but the indirect forms of compensation you provide actually help you retain and motivate your team members most effectively. This is because these elements directly impact an employee’s well-being and job satisfaction.

So, what are some types of indirect compensation you could weave into your nonprofit’s compensation packages? Consider these popular options:

• Health insurance: Offering medical, dental, and vision insurance plans allows employees to care for themselves and their families.
• Retirement plans: 401(k)s or pension plans demonstrate to your employees that you’re invested in their long-term financial well-being.
• Paid time off: Vacation time, holidays, sick time, and emergency leave pave the way for a healthy work-life balance.
• Transportation benefits: Parking fee reimbursement or public transit passes can help employees manage commuting costs, especially if they need to work in person often.
• Employee assistance programs (EAPs): These programs typically provide confidential assistance for employees in areas like financial planning or mental health.
• Employee wellness programs: Fitness challenges, mindfulness sessions, and access to exercise classes can all empower employees to keep their health top of mind.

As you consider which types of indirect compensation to incorporate into your nonprofit’s compensation strategy, reflect on what you know about your employees. Offering benefits that they find exciting and useful will be key to your retention efforts. 

3. Support career advancement. 

If you want your employees to stick around for the long term, you must demonstrate that they can have a long and fulfilling career with your nonprofit. One of the best ways to show that you’re invested in your employees’ future success is to support their professional development.

Here are a few tips for doing so:

• Use performance reviews as a jumping-off point. A formal performance review allows you and your employees to get on the same page regarding not only their current performance but their future plans. Ensure you set aside time in performance reviews to discuss goals or milestones your employees want to reach and how you can support them in getting there.
• Monitor employees’ progress toward their long-term goals. Working off of the goals you set together in performance reviews, regularly check in with your employees and evaluate their progress toward their objectives. For example, if a major gift officer wants to improve their fundraising skills, you might track quantifiable metrics such as major gift solicitation success or total fundraising dollars raised.
• Offer leadership opportunities. Some employees may be interested in one day moving into a leadership role at your nonprofit. Give them opportunities to lead out on projects or run a task force. This allows them to get experience managing others and taking on the responsibility of being a leader.
• Provide resources for employees to expand their skill sets. Engaged employees will always want to learn more and improve in their areas of expertise. Look for ways you can connect employees with learning opportunities. For example, you may find an online course that a fundraiser can take to learn the basics of prospect research and wealth screening, or they may come to you with a request to attend a conference focused on prospecting.

No employee wants to work a dead-end job. Show your employees the myriad of possibilities for their careers and personal fulfillment that are within their reach at your specific organization—this will entice them to keep working for you for years to come!

Employee retention is essential for the success of your nonprofit. Incorporate the three best practices above to show your employees that you value them and want to offer them the best employment experience possible, even when your purse strings are tight. 

About the Author

Jill Krumholz
Managing Partner | RealHR Solutions

Jill brings to RealHR Solutions experience as a business owner, executive search consultant and corporate HR professional. Throughout her career, she has had the ability to build strong relationships, identify client needs and help company’s find solutions. As a search professional she used these strengths to source and identify talent. Before joining RealHR, Jill was a Principal at Charleston Partners, a global executive search and talent advisory firm for Fortune 500 companies. She was also a Partner at Hayden Resource and previously founded her own search firm. Her prior HR experience includes retail and healthcare industry HR and operations. management positions. Jill holds a Masters in Industrial Social Work from Fordham University and a B.A. from CUNY City College. She is currently an active member of The Society of Human Resources Management nationally and locally.