There are almost 2 million nonprofit organizations operating in the United States today. They have an outsize impact on the society around them — helping those in need, educating the public, and raising funds for valuable causes.
Each organization depends on the skill, knowledge, and goodwill of its employees and volunteers, which makes human resources crucial to every nonprofit’s success.
But nonprofit HR comes with its own challenges, like tough recruitment, funding, and compliance.
Below, we'll explore how following best practices for nonprofit HR can help optimize employee and volunteer performance.
How Is Nonprofit HR Different From For-Profit HR?
Over the years, nonprofits have evolved their own tools and networks. There are nonprofit recruitment sites, nonprofit conferences, and even specialist HR software for nonprofits.
That's because the difference between nonprofit and for-profit organizations goes way beyond mission statements.
Nonprofits generally work with much tighter budgets and limited resources. As a result, they rely on volunteers and grant funding — which comes with its own HR challenges.
For example, many nonprofits structure their recruitment around funding for specific projects. That means new team members have to come on board fast, volunteers have to be trained, and there has to be a plan for winding down the project if funding ends.
On the other hand, for-profits have the capital to invest in hiring paid, long-term employees with salaries and benefits. There’s less of a scramble to pull together teams for projects and community initiatives because there are already employees on hand.
While nonprofit HR managers juggle the challenges of funding and stability, they also worry about how the organization looks from the outside. They have to maintain their public reputation, comply with regulations, and adhere to the organization's mission and ethical standards.
Public image matters to for-profit businesses, too — but they're generally held to a less rigid standard. Although there's evidence that consumers are starting to make more decisions based on their principles, they still expect for-profit companies to be focused on their bottom line.
Key Responsibilities of HR Teams in Nonprofit Organizations
There are three pillars of human resource management that apply to every organization: strategic planning, workforce development, and managing performance. However, those pillars can look a little different for nonprofit HR teams:
Strategic planning: While for-profit businesses can plan their budgets years in advance, nonprofit organizations need to be more agile and ready to jump at funding opportunities at a moment’s notice. Their strategic planning has to take in a wider range of scenarios and risks because there’s nothing to fall back on.
Workforce development: It can be tough to recruit staff members, volunteers, and trustees or board members when you're running the HR department on a shoestring budget.
Performance management: For nonprofits, this includes a heavy focus on compliance, ethics, and living up to the organization’s values. HR teams work hard to engage and educate nonprofit employees about the cause they're part of.
Let's take a closer look at how these pillars break down into the key responsibilities for nonprofit HR teams: recruitment, volunteer management, and compliance.
Recruitment, Onboarding, and Retention
Recruitment is a challenge in many industries these days — but it can be especially tricky for nonprofits. In a 2023 study, 75% of nonprofits said they were struggling to find new hires. Many nonprofits also have a volunteer recruitment strategy, which can look quite different from HR for paid employees.
In that difficult environment, nonprofit HR teams have key responsibilities across recruitment, onboarding, and retention.
Recruitment:
Creating targeted, specific job descriptions for paid and volunteer roles
Streamlining the hiring process so that you can recruit faster when needed
Onboarding:
Auditing hiring processes and pay equity to make sure that your organization treats all employees fairly
Setting up an onboarding process that welcomes new employees and educates them about the organization
Retention:
Building a positive, transparent workplace culture where employee feel that their voices are heard
Offering development opportunities and training to encourage employees to stay with the organization
Choosing indirect benefits that will attract and retain candidates, such as flexible working or wellbeing support
Volunteer Management
For nonprofits, recruitment and retention includes volunteers as well. While compensation doesn't necessarily apply, volunteers have other needs instead.
If your nonprofit works with volunteers, your HR team is responsible for:
Recruiting volunteers through social media, volunteer sites, and your existing pool of donors and supporters
Training volunteers in specific skills or for specific projects
Using nonprofit HR software to manage volunteer capacity and shifts
Finding ways to reward and recognize volunteers for their efforts
Developing a strategy to retain volunteers over time
Compliance and Ethical Standards
Nonprofits are subject to strict regulations. From federal laws to individual background checks, nonprofit HR teams must be responsible for:
Legally differentiating paid employees from volunteers
Reporting donations correctly
Applying, using, and reporting on grant funding
Handling personal data from donors, volunteers, employees, and service users
Safeguarding vulnerable service users or youth volunteers
Industry regulations (depending on the nonprofit)
Best Practices for Nonprofit Human Resources Teams To Consider
Since nonprofit HR has its own unique challenges, it also has specific best practices. While implementing these ideas could be helpful to any organization, they're especially important for nonprofit HR professionals.
Develop Clear HR Policies
Clear policies can save you time, effort, and potentially even legal trouble. Instead of making case-by-case decisions, you can simply point people to the relevant policy.
It's an HR best practice to publish all relevant policies in an employee handbook. As well as sharing the handbook during onboarding, it should be available for easy reference over time — for example, by storing it on the organization's intranet or a shared drive.
Whenever policies are updated, you should communicate the changes widely. Depending on your organization, that could take the form of an email, chat message, or news item in a meeting. However you share the information, make sure people know who to come to with any questions.
The policies you share should cover both HR processes (such as how you're working toward pay equity) and working procedures (such as compliance guidelines for different departments). You'll need policies for both employees and volunteers — and clear guidance for managers on the legal difference between those types of workers.
Invest in Training and Development
Training and professional development initiatives can promote recruitment and retention, because employees and volunteers are attracted by the chance to improve their skills. They make sure that the quality of work in your organization improves over time. They might even open up new opportunities for your organization as your staff becomes more skilled and specialist.
However, continuous learning programs cost money. To get the most value from training and development, start by polling managers and employees to find out what the biggest gaps in skills or knowledge are. Once you've chosen a relevant program, you'll need to monitor progress to make sure that the training is effective.
It's also worth considering which training opportunities will attract more volunteers. For example, if you want to recruit more youth volunteers, is there a way that you can offer college credits or help with certifications? What training would paid employees need to progress in their careers?
Think about timing and delivery too. Some people prefer in-person training, while others need the flexibility of online, student-led courses. And when it comes to paid employees, you'll need to balance training with adequate time to perform their work duties.
Create a Positive Culture
Workplace culture and atmosphere can go a long way toward recruiting and retaining more staff. If you want to develop a positive work environment, try thinking about it in terms of an employee's journey. A supportive onboarding process is a great start, but they'll also need ongoing professional development and recognition of their growing experience. That means indirect benefits as well as compensation.
Nonprofits can use remote work, DEI strategies, mental health support, and wellness programs to retain staff. It's vital to note that flexible work and support initiatives can make the most difference for people who are traditionally disadvantaged in the workforce, such as women with young children.
It's also important to create a transparent culture. When there are issues with compliance, discrimination, safeguarding, or even performance, both employees and volunteers should feel comfortable speaking up. You can support this by publishing HR policies, offering multiple ways to contact your team, and running regular training.
Use Technology for Human Resources Management
For nonprofits where you have to make the case for every expenditure, it can be hard to argue the reasons to invest in HR software. And it's true that most nonprofit organizations don't need a massive, enterprise-level HR program.
Instead, they can benefit from focused, specialist software that helps them manage a complex workforce, maintain standards, and allocate resources.
Let's take a closer look at some of the ways that nonprofit HR software can streamline your work.
Implement Effective Communication Strategies
Communication is an underrated aspect of what HR teams do. Yes, you come up with policies, choose training programs, and help everyone keep up to date with compliance — but all of those HR functions depend on communication.
Recording policies in the employee handbook is a good start, but it's not enough. Nonprofit HR teams have to set up channels of communication so that staff and volunteers can find information and ask for help when they need it.
Think about which forms of communication are already most used in your organization. If people spend all day on Slack but don't read emails, then you need an HR Slack channel. If they engage with webinars more than PDFs, then that's how you'll need to deliver training.
You'll also need to think about how employees and volunteers can communicate with you. They'll need a way to ask questions, raise issues, and perhaps even make confidential reports in certain situations.
Regularly Review and Update HR Processes
The demands on nonprofit HR teams change constantly. Employees come and go, the hiring market changes, funding ebbs and flows, and new regulations develop.
Even when you've set up HR policies and training programs, you'll need to continuously update them at least annually. This is also an opportunity to keep improving HR within your organization. You can incorporate feedback, clarify policies, and assess whether the developments and employee perks on offer are the right fit.
Sign up for updates from industry bodies, local authorities, and any other relevant organizations that could give you a heads-up on changes in regulation and compliance. You should also have regular internal audits to make sure that your communications, policies, and DEI initiatives are up to scratch.
Improve Your Nonprofit Human Resources Processes With Archarina
Nonprofits are talented at doing more with less — and that includes their HR departments. Nonprofit HR teams handle challenges such as a tight job market, volunteer management, and tough regulations.
The best HR teams invest in employees and volunteers. They create a positive culture with clear communication, policies, and opportunities to give feedback. But all of those best practices take time, and you need the right tools for the job.
Archarina’s ArcHRM is a specialist HR platform that's affordable, flexible, and easy to set up. You can automate core HR tasks from onboarding to benefits administration, and empower your workforce with training and data insights.
