Magazine article Stanford Social Innovation Review

Key Perk of Nonprofit Work Faces Extinction

Magazine article Stanford Social Innovation Review

Key Perk of Nonprofit Work Faces Extinction

Article excerpt

EMPLOYEE BENEFITS

Study finds nonprofits are losing their ability to offer health insurance

Dewey Matherly, executive director of Family Service Inc., a small counseling service in rural Gastonia, N.C., has never been able to pay his 15 employees rich salaries, but strives to make up some of the difference through generous healthcare packages. "I think it's important," says Matherly. "It's one of the perks we can provide."

This kind of generous policy could be facing extinction, however. A recent study by Johns Hopkins University's Center for Civil Society Studies found that all sorts of nonprofit organizations in the United States, from rural counseling services to urban theater groups, are being squeezed by escalating health insurance costs.

The study surveyed 250 nonprofits and found that 63 percent of them had health benefit cost increases of at least 11 percent over the past year. More than 60 percent passed at least some of those costs on to their employees, while others were forced to eliminate raises or cut back on employee health benefits.

These statistics alone do not suggest that nonprofit employers endure higher healthcare costs than for-profit businesses. In fact, employers of all kinds, and small businesses in particular, face a similar squeeze. A study by the Kaiser Family Foundation found that between 2002 and 2003, insurance premiums jumped 15.5 percent for firms with fewer than 200 workers, and 13.2 percent for larger companies.

The Johns Hopkins study, however, argued that steep healthcare costs hurt nonprofits more than they do private-sector employers. Many nonprofit workers are already earning less than their private-sector counterparts and are ill equipped to absorb any sort of increase in living expenses. They also miss out on perks like employee stock options or other forms of company ownership that can supplement salaries. …

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