Nearly 95 percent of nonprofit organizations globally have been negatively impacted by the coronavirus. Funding dropped significantly in the first weeks of the pandemic, placing many nonprofits in crisis mode. While funding has increased since then, the organizations benefiting from it the most are involved in pandemic response.
At IDI, we’re helping non-profit organizations to weather the payroll uncertainties of the coronavirus and become more resilient for the present and the future. Let’s explore the unpredictabilities your payroll department may be facing, and the best practices we’ve discovered for facing those challenges.
Work-from-home Timesheet Issues
If your organization is working from home due to COVID-19, your payroll process may be facing new challenges you’ve never had to think about, before. How do you make sure your remote workers are reporting accurate time — especially when your non-exempt employees report overtime? And how do you get them to turn in their timesheets on time?
Here are a few tips we recommend:
- Implement new reporting processes. Create a standard process for all your employees to record their work hours, such as an electronic timekeeping system that workers can access from home. Also, develop policies that require employees to record all hours worked and expressly prohibit off-the-clock work.
- Communicate your policies. It might feel like overkill, but communicate frequently, and in multiple ways. Your policies should be easy to access, easy to understand, and easy to follow.
- Reduce late timesheets. Consider using automation. If forgetfulness is the culprit for missing timesheets, send an automated email reminder the morning that timesheets are due.
- Use the right time collection method. Many non-profit organizations capture time information using spreadsheets. It's a simple method, but spreadsheets are fraught with problems. IDI can consult or work with a time-and-attendance vendor to get you the level of detail you need.
Should You Offer Hazard Pay?
When the coronavirus came to the United States, we had an influx of support requests from existing clients who were adding the Hazard Pay code into their payroll systems. Hazard pay is additional pay for performing hazardous duty or work that involves physical hardship. During the coronavirus, people who work onsite at community centers and other social services organizations may qualify for hazard pay.
This is the first time that many non-profit organizations are providing hazard pay, and they come to us with questions about how to adjust their overtime rates. The Fair Labor Standards Act (FLSA) isn’t clear on that issue, except to say that overtime rates need to be adjusted.
We know of cases where accounting teams have gone back and forth debating whether or not hazard pay should qualify for overtime adjustment, or if it’s just incremental pay where the overtime rates remain the same. It isn’t clear, and it’s important to get expert input before a decision is made at your non-profit organization.
Non-profit organizations need to ask whether they should even offer hazard pay. Talk to a labor attorney to determine if the type of work your organization performs qualifies for hazard pay. Based on the specific work your nonprofit is doing, you should talk to a specialist in that area or consult with someone on your board or management team.
Unclear Payroll Technology Decisions
For accounting and payroll departments, the coronavirus pandemic has made technology decisions even more complex. On the one hand, your organization needs to proactively create more efficiencies so that you can do more with less. On the other hand, it’s a challenge to know whether you should implement a system that’s designed for your current funding stream, or if there should be considerations around new funding sources in the future.
When nonprofits approach IDI, they have several questions: How do I allocate earnings across funding sources? Will these funding sources continue to fund our organization in future years? They aren’t sure if they’re building their salary allocation solution for the current state or the future state.
Here are some tips we recommend for building the right payroll solution:
- Ask funding sources for guidance. If you’re unsure that a new time-and-attendance system configuration will improve efficiencies, go to the source! Review the system with your funders before making a final decision.
- Discuss with your grant team. Ask grant managers for input about their needs: what changes need to be made to reports to make their lives easier? How reliable are the financials with the current systems in place? Answers to these questions can help you understand your technology needs more fully.
- Review with your board. Board members can offer helpful perspectives, and they have a vested interest in the success of the organization. Share a mockup of the new time-and-attendance solution with associated cost centers (e.g., activity and fund) and the associated IDI salary allocation earnings to confirm the value of your proposed investment.
Securing Funding During a Downturn
While most nonprofits have seen a large decrease in funding, some organizations have benefited from COVID-19. For example, some funders like The Bill and Melinda Gates Foundation are pouring money into efforts related to relief and social equity. Other sources have capped out. In either case, organizations can struggle with the sudden change in funding.
- With increased funding, how to change the way that earnings are allocated?
- With decreased funding, how to make sure you’re being strong stewards of the funding you have left and continue to show your value as a recipient of the grant?
IDI Is Here for You
We understand the uncertainties that nonprofits are experiencing during COVID-19. We have worked hand-in-hand with non-profit organizations for many years and have built lasting relationships with our customers.
You have our promise to walk with you through the payroll challenges of the times so that you can confidently move your organization toward the future.