HR is similar across industries, but nonprofit HR has its own unique benefits and challenges. This article discusses those challenges and offers advice and solutions a nonprofit HR person might encounter. Read on to learn more!

Table of Contents

Watch the world’s largest HR encyclopedia be built in real-time

Subscribe to get a weekly roundup email of all our new entries

What Is Nonprofit HR?

Nonprofit HR is human resources for nonprofit organizations. Although HR is similar from one industry to another, nonprofit HR is not the same as HR in a for-profit company or even a governmental organization or agency. Instead of focusing on a product or service for profit, a nonprofit organization focuses on delivering a service for someone (or something) else’s benefit, such as an environmental organization, a community mental health agency, a membership organization/society that publishes scientific research, a charity, or innumerable other similar workplaces that are mission-driven.

The Importance of HR for Nonprofits

All employers are subject to federal and state labor laws, so if you employ people, you need HR. If your team is small, an HR consultant can help get your organization on the right track for a fraction of the cost to hire a full-time staff person. You might also consider hiring a part-time HR professional to ensure compliance with relevant staffing-related laws.

  • Labor law compliance. All employers, even those with only a few employees, are subject to federal and state labor laws, including the Fair Labor Standards Act, minimum wage laws, equal pay acts, taxation laws, and more. As staff counts increase, employers become subject to more laws at headcounts of 15, 20, 50, and 100.
  • Confidentiality and separation of duties. Many functions of HR, including aspects of pay, benefits, disability, family situations, etc. involve employees’ private information. Having a dedicated HR professional who understands the ins and outs of confidentiality helps build trust and keep your organization out of legal hot water. Many small nonprofit organizations hire an office manager or administrative assistant and assign HR functions to them, but if they are not trained in handling private and confidential information or exercising judgment and discretion, it can lead to many issues, including legal ramifications. It also helps to have someone “in house” who can work directly with employees on issues around pay, benefits, and workplace dynamics.
  • Strategic partner. As discussed in more depth below, nonprofits carry a unique set of challenges. A skilled HR professional can help all levels of the organization, from executive director to entry-level staff member, navigate the workplace with more ease, greater efficiency, and increased success.

What’s the Role of HR at a Nonprofit?

Much like HR in other industries, the role of nonprofit HR is to strategize, develop, shepherd, advise, and execute all of the employee-related best practices relevant to the organization. Some of the key nonprofit HR roles are:

Organizational Partner

In a nonprofit environment, HR has a unique opportunity to dive in as a partner to leadership and staff. They must understand the organization’s mission and values, finances, practices, and processes, etc., in order to help the organization function at its best. The HR professional helps leaders think through dynamic and flexible staffing models, best practice benefits, organizational culture (more below), and much more.

Culture Champion

Organizational culture is set by leadership, not HR, but HR professionals help shape and drive culture. Bringing forward best practices around work-life balance, shared values, responsive HR customer service, employee training, and development, etc. are all key parts of workplace culture, and perfectly positioning HR to make big impacts in these areas.  Further, HR will likely lead DEIB (Diversity, Equity, Inclusion, and Belonging) at the organization. This incredibly important work sets the tone for interactions with historically excluded or underrepresented volunteers and/or employees. This “culture champion” role is absolutely critical.

Employee Relations (aka. Adult Guidance Counselor)

Every workplace has organizational dynamics, politics, and interpersonal conflicts that can either reduce performance and efficiency or transform these dynamics into something useful and valuable. How HR guides others in handling and responding to conflicts can determine whether the conflict is ignored, feared, and avoided, which can lead to resentment and hostility, or embraced and respectfully engaged, which leads to a culture of candor and trust. To learn how to do this well, try shadowing successful HR professionals (see below about building a network) to get a feel for how to approach different situations.

A nonprofit HR professional also acts as a trainer, ensuring that staff are taught basics like anti-discrimination, anti-harassment, and workplace values. This helps staff understand what is expected in their interactions with others.

Coach and Cheerleader

Many managers (people who supervise others) have never received formal supervisory training, and many are uncomfortable giving feedback, assessing performance, completing evaluations, dealing with conduct issues, etc. The HR professional is prepared to offer coaching on these topics and guide supervisors accordingly. Likewise, employees and supervisors are often focused on the day-to-day, and overlook personal growth and development, risking eventual dissatisfaction and disengagement. Nonprofit HR can help staff and their supervisors focus on growth trajectories, skills/experience gaps, and needed support.

Specific Challenges Within Nonprofit HR

While HR is fairly similar from one industry to the next, there are some challenges unique to HR in nonprofit environments. It’s important to know what those challenges are, and how to work with them to maximize effectiveness.

Limited Budgets

Unlike most large corporations, many nonprofits need to keep budgets low, and spending in one area means pulling back in another. HR gets hit particularly hard here because it’s often seen as a “cost center” where salaries and benefits live. There’s no “one size fits all” solution; creativity is the best way to work around a limited budget.

Here are some creative examples to real-life budget challenges:

No dedicated funding to attend that HR conference attendance? Try crowdsourcing funds from internal departments in exchange for bringing back solutions to specific problems. No budget for wellness programs? Try organizing free lunchtime walking groups, or create a recipe-sharing Google drive that everyone can contribute to. No money for team building? Play Bingo or Pictionary (or better yet, virtual werewolf – Google it!) using free online software. There’s a creative solution to every challenge.

Few Staff, Many Hats

Because budgets are restricted, staffing often works on a skeleton crew basis — just enough staff to steer the ship and no more. For HR, this means wearing many hats. At a small nonprofit, the HR professional might run payroll and administer benefits, handle employee relations, conduct training, order office supplies, plan the annual holiday party, fix the printer, and more. Potentially without access to legal counsel, tax professionals, or others who have specialized knowledge, they can dive into learning it themselves ( see “Flying Solo” below). For someone wanting to specialize in one functional HR area, nonprofit HR probably isn’t ideal. Nonprofit HR is best for the generalist who wants to have their hands in a bit of everything.

Recruitment, Retention and Staff Management

These are two important areas for any HR generalist, as the limited budgets and low staffing of nonprofit environments can make these functions more difficult. Fighting for talent is challenging anywhere, but with lower-than-average salaries, it’s an uphill battle to attract good candidates. Likewise, retention is a challenge where there is limited growth potential and fewer opportunities for development. Many nonprofits rely on time-limited grants to fund projects, which means scaling staffing up and down as needed. Additionally, many nonprofits employ volunteers and interns who are often uncompensated but still need to be managed in line with relevant labor laws.

In the absence of robust compensation and advancement, the best way to attract and retain great staff is to focus on building and selling the culture. Many nonprofits attract candidates by promoting the mission and relaxed atmosphere and then retain staff by “compensating” with better work-life balance, more flexibility, and less corporate environment. While corporate employers may pay more, the exchange might be longer hours, less camaraderie, fixed schedules, and so on. The HR professional helps build out the culture and then sells it to candidates.

Flying Solo

As the nonprofit HR is often called a “department of one,” the HR professional will frequently report directly to the head of finance and/or operations. Additionally, since nonprofits are usually small, creating and maintaining professional friendships within the organization can be difficult. Cultivating a network of other HR professionals can help personally and professionally, providing resources and support for questions, sample policies or best practices, etc

Questions You’ve Asked Us About Nonprofit HR

Nothing and everything. HR fulfills the same role and functions for both, but nonprofits have specific challenges, including reduced budgets, lower staffing numbers, recruitment and retention challenges, and more. However, they also offer a different growth path for HR professionals who want to work more holistically and develop in all key areas of HR.
If an organization employs people, it needs HR to ensure compliance with relevant federal and state labor laws. Consider outsourcing if the organization is too small to justify a full-time hire.

Tammi has 8+ years of progressive HR experience in a variety of industries and settings, including nonprofit and higher education. She believes that doing HR well means being a true partner and collaborator with every part of an organization, and by saying “yes” to creative problem solving wherever and whenever possible (and legal). Her favorite work includes diversity, equity, inclusion, and belonging (DEIB); the how and why of hiring and retaining great people; helping to sustain an organizational culture of trust, empathy, and candor; and anything else that prompts employees to say they love where they work. In her free time, you can find her wandering outdoors, studying clinical herbalism, tinkering in the kitchen, dismantling the patriarchy and white supremacy, and hanging out with her cat, Emily Dickinson.

Want to contribute to our HR Encyclopedia?

Posts You Might Like

The Ultimate Guide on How to Manage Employees in a Small Business

The Ultimate Guide on How to Manage Employees in a Small Business

When it comes to running a small business, we know that managing employees is often one of the most difficult tasks. People are complicated, and finding a way to keep your employees happy and productive can be challenging. This article shares specific advice for what you can do in the three phases of the employee lifecycle to get the most out of each employee.

Read More »

Want to join our network of contributing HR professionals?

Scroll to Top

Submit a Question