Of course, working with a PEO is not right for every organization. Your employees may gain access to more and enhanced benefits than your organization alone could provide, allowing your nonprofit or foundation to remain competitive for top talent. Plus, the PEO, with much higher aggregate numbers of employees, has greater buying power to offer a wider variety of options and negotiate significant discounts on everything from healthcare insurance to gym memberships. The PEO handles the more indirect, administrative tasks, such as processing payroll, managing employee benefits, and taking care of official filings and compliance. You still maintain all control over hiring, firing, setting salaries, and other direct contact with employees. PEOs use a “co-employment” model, where the employees of your nonprofit technically become employees of both your nonprofit and the PEO. The popularity of PEOs has increased in recent years as more organizations discover the benefits of using this outside assistance. Back in 2009, the Charity Lawyer Blog identified working with a PEO as one of its Top 10 Smart Moves Great Nonprofit CEOs Make. While the use of PEOs by 501(c)(3) organizations is gaining in popularity, it isn’t new. ![]() (These are not the only options other PEOs commonly used by nonprofits and foundations include ADP TotalSource, Namely, and Zenefits, among others.) We both have positive experiences working with a PEO Exponent Philanthropy offers TriNet as a benefit to its members, and the National Council of Nonprofits works with JustWorks for its HR needs. ![]() The PEO model allows employers to outsource HR risks, lower HR-related costs, benefit employees, and free staff time. Given the multi-faceted and time-consuming responsibilities of HR, an increasing number of nonprofits and foundations have been turning to a solution called a Professional Employer Organization. And on top of all that, add the costs of damaging employee morale if benefits are weak or poorly administered. Dropping the ball on any aspect of HR could mean (i) diverting even more time and funds from mission to fix errors and pay any fines for noncompliance, (ii) paying more than needed on employee benefits or selecting the wrong options, and (iii) distracting the organization’s leaders from other pressing matters.
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