The responsibility of nonprofits to take care of staff, now and in the future

When the pandemic hit, everyone panicked, and nonprofits weren't immune. Organizations like mine, Teen Cancer America (TCA), relied significantly on large in-person fundraising events and activities to support our work, and when such events were no longer possible, our entire donor-relations model was disrupted. And this happened just as demand for our services increased as a result of the acute isolation young cancer patients were experiencing as a result of the pandemic.

Nearly every nonprofit has struggled with its own pandemic-related challenges, and while many have found creative ways to keep their heads above water, maintaining and supporting a stressed staff — helping them do their jobs and finding new ways to reward them — has been a challenge. With our operating budgets under pressure, monetary rewards could not be guaranteed. How could I make sure they knew that I authentically cared about their well-being?

I wanted to do something that demonstrated thoughtfulness, truly helped boost team cohesion, and also could signal to donors that TCA was a responsible employer while being fiscally prudent.

The pandemic has highlighted the uncertainty of our futures on a very personal level. I thought about employees like Alec, one of our youngest team members and a cancer survivor: How could I ensure that his and other employees' financial futures were safe? I pondered the responsibility I had to support staff in their future planning and concluded that the charity should investigate 401(k) options, something I hadn't previously considered.

"For people my age, the future of our careers fluctuates, and with that comes financial uncertainty," Alec told me. "Especially with this pandemic and having had cancer myself, I know how important it is to prepare for the future, whatever that looks like for me. I may not be in the same career, I may not have a stable job, or I may not even be able to work for health reasons in the future, but I know I will have this 401(k) account ready for me so I can retire with fewer worries."

Most nonprofit leaders might assume their organizations aren't even eligible for such a plan. I'd assumed that the expense and lack of flexibility would make it impossible for TCA, but it turns out that today's 401(k) plans offer some options.

My criteria had been straightforward: low cost; competent account management; complete flexibility over the level of employer contribution, which would enable me to manage within our means; and simplicity and flexibility for staff to manage their own accounts. I was referred to Human Interest,* and the wealth management company run by one of our board members did due diligence and gave the green light, impressed by its investment philosophy and low fee structure. We also looked into 403(b) plans, but 401(k) plans turned out to be the best option for a nonprofit like ours.

Most of my preconceptions that nonprofits couldn't afford to provide 401(k)s to their employees were smashed: There was flexibility in how much in matching funds I could offer year-to-year, depending on how well our fundraising went. An "auto-enroll" function made sure that everyone in the organization could take advantage of the new benefit right away, and employees could change their contribution level from month to month. And because we had control over the charity's contribution, I could show existing and potential donors that TCA was doing something important to take care of employees both now, during a difficult time, and in the future, as responsible employers.

As someone who has gone through this 401(k) selection process, I want to encourage other leaders to consider what it might mean for their employees' lives. While nonprofits often assume that they can't offer a "full benefits package" that includes retirement plans, many team members under 30 either haven't thought much about retirement or assume it is out of reach because they are used to living paycheck to paycheck. It is our responsibility to help educate them.

The retirement gap (the amount people need to retire comfortably vs. the amount they are currently on track to save by retirement age) is widening into a chasm. This is potentially disastrous for individuals, families, and a society that is ill-equipped to carry the burden of a future aging population. Nonprofits have just as important a role to play as any other employer in closing that gap.

Here are a few practical tips for other nonprofits who may be looking at 401(k) plans as an option:

Communicate with and educate your employees about why retirement matters. Once our staff understood why it was important to save early and, most importantly, why it should be part of the permanent workplace culture at TCA, we had high rates of participation, making it clear the benefit was a worthwhile investment.

Be transparent and communicate to donors about the plan and the reasons behind it. The messaging should emphasize why you are fully committed to helping staff through times like the pandemic and other challenges. Demonstrating that you've chosen a low-cost, manageable plan lets funders — and your board — know that you're controlling costs and using contributions responsibly.

Here are some specific features in a plan that will help in the nonprofit context:

• Plans with resources to help educate employees and guide their investment choices.
• Easy initiation, with an option to "auto-enroll" employees. Research has shown that auto-enroll encourages higher participation and savings than the "opt-in" method.
• Compare fees to get the lowest. Traditional 401(k) providers have tailored their offerings to big companies and often include hefty sign-up, initiation, and termination fees, but now we have far less expensive options to choose from.
• Make sure it allows for flexibility. Does the plan allow the employer match to change according to a yearly budget? This is a key feature for the sometimes volatile budgetary world we all live in.
• Think about your employees and the apps they use in their daily lives. Our plan came with a dashboard for millennial and Gen Z staff who are used to managing all things online.

Given nonprofits' often limited budgets, it's easy to ignore what we used to call "nice-to-haves" for our staff, but if the pandemic has taught us anything, it's that well-being matters, and taking our employees' wellness — physical, mental, and financial — seriously is an essential part of keeping our organizations afloat. In the case of a 401(k) or other retirement plan, this nice-to-have should become a must-have. I would like to see this as the universally accepted norm on a global scale.

Simon Davies is executive director of Teen Cancer America (TCA), a nonprofit founded by Roger Daltrey and Pete Townshend of The Who that helps health providers and systems develop specialized programs and facilities for teenagers.

*Disclosure: TCA is a current customer of Human Interest. However, neither TCA, nor any of its representatives, received compensation for the publication of this article.