5 Ways Nonprofits Can Make Paid Parental Leave More Affordable

In the nonprofit sector, employee benefits typically cover the basics — health, dental and vision insurance. But in today’s competitive job market, especially with rising costs and parental stress, those offerings may not be enough. Nonprofits face unique challenges in attracting and retaining top talent, particularly when salaries can’t compete with the private sector. 

Offering unique and impactful programs like paid parental leave can help nonprofits stay competitive, so here’s what you need to know about paid parental leave and what should go into a policy. 

Why Paid Parental Leave Matters for Nonprofits

Nonprofit employees are often mission-driven and deeply passionate about their work. However, supporting them with a strong benefits package is critical for their well-being and retention, especially when the team includes working parents. There are more women in the nonprofit sector with nearly half of employees aged 25 to 54. Offering paid parental leave not only supports employees during a crucial time in their lives, but also helps nonprofits stand out in a competitive market so you can retain those employees in their prime family-building years. 

There’s a common misconception that nonprofits can’t afford paid parental leave, but 48% of nonprofits in the U.S. now offer paid parental leave (opens as a pdf), which is higher than the 42% of government contractors and 45% of commercial businesses that offer paid parental leave. Rising costs and inflation has bumped non-essential employee benefits down the list, to understandably prioritize cafeteria plans, so how can nonprofits afford to offer paid parental leave?

Strategies and Policy Must-Haves for Nonprofits

Like many of the individuals you want on your team, here are a few creative and resourceful strategies that nonprofits can employ to make a paid parental leave policy affordable and sustainable.

1. Start Small 

You don’t have to offer 100% of pay right away. Many organizations phase in their paid parental leave programs, beginning with partial pay or setting caps on the amount of leave available. You can also offer to cover just a few weeks at a lower percentage, which will likely be more than other nonprofits (and possibly any private sector for-profits competing for your talent). Something is better than nothing, especially if you can’t raise other forms of compensation. 

2. Leverage Existing State Programs

Many states have public paid family leave programs that can significantly reduce the cost to employers. There are currently nine states plus Washington, D.C., that have state mandated paid family leave for which your employees may be eligible. While paid family leave benefits are limited and only available to about 27% of private sector employees, by utilizing these programs, nonprofits can provide generous benefits without bearing the full financial burden.

3. Implement Tenure Requirements

Requiring employees to meet a certain tenure before qualifying for paid leave is another cost-containment strategy. To align your policy with state and federal leave laws, like the Family and Medical Leave Act (FMLA), employers can require six to 12 months of service so only long-term employees can benefit from the program. This will help nonprofits manage costs while still supporting their team.

4. Consider Paid Parental Leave Insurance

For an affordable and tax deductible option, insuring paid parental leave can be a financially smart move from a cash-flow perspective. Nonprofits can consider partnering with an insurance provider to offer paid parental leave, which can help them position costs to the board or funding request. This is a new solution to the market, making it a great way to manage paid parental leave without funding and managing it in-house.

5. Look Into Grants

While grants are a critical funding source for many nonprofits, they can be challenging to secure and often come with restrictions on how the funds are used. Organizations should explore available grants that allow for employee benefits and consider incorporating paid parental leave into their budget planning.

Next Steps for Nonprofits

Offering paid parental leave may seem like a challenge for nonprofits, but it is a worthwhile investment in your team and your organization. With the average nonprofit employee tenure ranging from two to five years, offering paid parental leave can boost retention and demonstrate that your organization supports its team holistically — even outside of work. By starting small, using existing resources like state programs or insurance and exploring grant funding, nonprofits can offer a unique and impactful program to their employees, ultimately boosting retention and supporting the passionate individuals who drive your mission forward.

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.