Running a nonprofit requires a lot of hard work and dedication from your employees. You need an effective nonprofit human resources (HR) team to recruit, manage, and support that hardworking team. Nonprofit HR is the backbone that keeps the organization well-staffed and running smoothly despite ongoing challenges that come with nonprofit management. 

Nonprofits, including many behavioral health and human services (BHHS) organizations, need to find the right tools and strategies to support their HR needs. From keeping a close eye on labor spending to finding ways to ward off employee burnout and compassion fatigue, nonprofit HR teams play an essential role. Keep reading to learn more about the importance human resources professionals serve in nonprofit organizations, and find out how your organization can overcome nonprofit HR challenges with innovative strategies and technology.

What is Nonprofit HR?

Nonprofit HR refers to the human resource management practices used to support nonprofit organizations. HR professionals in nonprofits work hard to take care of all the great nonprofit team members who provide services or care to clients in the community. They ensure that everyone is properly onboarded, paid, and supported.  

Nonprofit HR includes core human resources tasks, such as:

• Talent acquisition: Limited budgets and resources mean recruiting new employees can be a challenging process for nonprofits, but nonprofit HR staff work hard to attract and hire top talent to meet the organization’s needs. 
• Payroll processing: Paying your people in a timely and accurate manner is one of the most important duties of the HR team.
• Benefits administration: Enrolling eligible employees in benefits during onboarding or open enrollment helps ensure that your employees can take care of their health. HR employees support this process through assisting employees with enrollment paperwork, helping them understand their benefits options, entering them into benefits systems, and answering benefits questions as they arise.
• Talent management: Human resources staff members work with people managers throughout the organization to support performance management and professional development efforts to help employees grow and improve their skills.
• Compliance support: HR professionals play a key role in ensuring the organization is following all relevant employment laws. They create and update workplace policies and employee handbooks, and track compliance issues such as staff licensing requirements, break time laws, and more.
• Strategic HR management: HR professionals act as strategic business partners to create long-term people management strategies that help your organization meet its goals.

How Does Nonprofit HR Differ From For-Profit HR?

The core HR functions are fairly consistent across all organizations, regardless of for-profit or nonprofit designation. However, nonprofit HR presents different challenges and requires unique approaches. 

Budgetary Limitations

One of the biggest differences between for-profit and nonprofit HR is budget. For-profit companies generate revenue by selling their goods and services, and income is often the primary measure of success. For-profit human resources departments often have more money for perks like employee recognition initiatives, performance incentives, team building activities, and employee wellness programs.

Nonprofit organizations typically rely on fundraising through grants or donations to generate income as their services are often free or offered on a reduced fee or sliding scale. Some nonprofits, such as behavioral health organizations, can bill health insurance companies like Medicare and Medicaid for services, but the reimbursement rates are often low and claims get denied frequently. As such, they don’t have a large budget for HR initiatives. 

The primary measure of success for nonprofits is also different from for-profits. Nonprofits typically focus on the number of people they are able to serve and overall client outcomes. Therefore, nonprofits typically try to keep administrative and HR spending to a minimum to allow the majority of their budgets to go toward client-focused efforts. 

Smaller HR Departments 

For-profit HR departments often include several specialists who focus on specific areas of HR. They may have an HR director, an HR assistant, a recruiter, a payroll specialist, a benefits administrator, a training manager, and an HR business partner. 

On the other hand, nonprofits often hire HR generalists to manage everything. This helps cut down on costs while still maintaining in-house HR. However, it does mean that nonprofit HR professionals are often stretched a bit thin and need to find ways to streamline all of the different HR processes that they need to manage.

5 Unique Challenges in Nonprofit HR 

Explore the most common challenges in nonprofit HR and find out how you can overcome them with the right solutions.

1. Meeting Staffing Needs With Tight Budgets

Nonprofit HR teams have to work harder to attract strong candidates, as they often have to compete for talent with for-profit organizations that can offer larger salaries and more perks. In ContinuumCloud’s 2024 Behavioral Health Industry Trends Report, 55% of organizations cited the inability to offer competitive pay and benefits as a recruiting barrier.

Nonprofit HR leaders struggling to recruit can adopt a few different strategies to appeal to candidates in other ways, such as:

• Writing stellar job descriptions that capture candidates’ attention and properly communicate the positives of the role (like supporting the nonprofit’s meaningful mission)
• Getting your position posting out to dozens of job boards to reach a wider audience, with tools like ContinuumCloud’s one-click apply
• Using an applicant tracking system (such as the one built into ContinuumCloud’s HCM) to provide an efficient, organized hiring process with prompt communication throughout the process

2. Engaging and Retaining Employee Prone to Burnout

Employee engagement and retention are both major challenges for most nonprofit HR teams. Due to the nature of their work, nonprofit professionals are particularly prone to compassion fatigue and burnout. Compassion fatigue is a form of emotional exhaustion that impacts those in helping professions. Meanwhile, burnout is a form of workplace stress and fatigue that often impacts those who have high workload, such as nonprofit workers in short-staffed organizations. Both of these issues can lead to higher rates of employee disengagement and turnover. 

HR staff should regularly check in with employees and talk to them about workload distribution or time off concerns. Nonprofits can also use Position Control within ContinuumCloud’s HCM platform to track labor hours and current vacancies to get a clearer picture of your workforce, This can help you identify which employees or teams are putting in extra hours or taking on bigger workloads to compensate for unfilled roles, leading to an increased risk for burnout.

3. Supporting Increased Training and Development Needs

Training is crucial within nonprofits, and it’s often an ongoing process. Many nonprofit roles in behavioral health have stringent continuing education requirements for licensing. Keeping up with these training requirements throughout the year can prevent delays in license renewals.

In addition, upskilling and cross-training is particularly useful for nonprofits. It’s common for one nonprofit employee to wear several hats due to the limited budgets and staffing resources available to nonprofit organizations, so you’ll want employees to have the skills and training needed to help out in different areas as needed.

However, balancing development goals, talent management, credential renewal requirements, and training progress can be difficult considering how busy nonprofit managers and staff are. ContinuumCloud’s HCM system intuitively tracks employee progress on training assignments or learning goals, while also alerting HR staff and employees when a credential or license is expiring soon.

4. Creating a Positive Workplace Culture

Building and maintaining a positive and supportive workplace culture is important for any organization, but it’s particularly significant in the nonprofit sector. Nonprofit work is fulfilling, but it’s also difficult and emotionally challenging. That means organizations need to keep morale high and provide a positive, supportive culture. 

Nonprofit employees may also be very busy and spend a lot of time away from their desks traveling to different worksites or meeting with clients, which can make it more difficult to build a culture of strong relationships and teamwork. Using digital communication tools can help keep communication open even when your team is dispersed. Tools like the company-wide communication and peer-to-peer employee recognition features built into ContinuumCloud’s HCM platform can help you promote a better workplace culture.

5. Difficulty Finding the Right Nonprofit HR Technology

There are plenty of HR software solutions on the market, but most of them were designed based on the HR needs of for-profit institutions and aren’t well-suited for nonprofit HR management. They’re often not flexible enough to support the complex labor allocations that nonprofits and BHHS organizations need for tracking program-specific spending. Traditional HR software also often lacks features like credential management, which is essential for small HR teams that have to stay on top of dozens or even hundreds of employee licensing renewals.

Many HR solutions also only act as one piece of the puzzle. Nonprofit employees don’t have time to log into a bunch of different systems for time-tracking, paystubs, benefits information, and performance goal tracking. They need a unified solution with intuitive employee self-service options that will allow them to quickly access what they need. That’s why using a unified HCM solution is best for nonprofits.

ContinuumCloud Offers A Purpose-Built Solution For Nonprofit HR 

ContinuumCloud’s HCM platform is purpose-built for nonprofits, with a special focus on meeting the needs of behavioral health and human services organizations. Not only is the platform’s position-based framework more flexible and better suited for the needs of nonprofit organizations, but our support team has a rich understanding of the unique challenges that come with nonprofit HR. Our highly configurable solution and knowledgeable team can help you tailor the system to best meet your needs and address your biggest nonprofit HR challenges.

Our platform includes rich analytics tools to help nonprofits make use of their workforce data. From real-time labor spending reports that can help you stay within budget, to custom reporting options that help you quickly create detailed and customized reports to report to board members or funders, ContinuumCloud’s HCM is here to help.

Contact us to learn more about how you can streamline your nonprofit HR processes with our innovative HCM platform.