Volunteers vs. Employees at Your Nonprofit

person standing wearing red shirt
by Advice Chaser
by Advice Chaser

The more work a nonprofit does, the more people need to be involved. But should your nonprofit hire new employees, or search for more volunteers? Which kinds of jobs call for volunteers, and which should go to employees?

Too often, you may hear the advice to “just get volunteers to do it,” but that’s not so easy. Volunteers can be as hard to find as employees. Meanwhile, managing employees at a nonprofit is its own challenge. Learn more about staffing your nonprofit, whether you’re seeking employees or volunteers.

person standing wearing red shirt

The Difference Between Nonprofit Employees and Volunteers

We all know the basic difference: your employees are paid, while your volunteers are not. But what happens if your employees also want to volunteer? In what ways can you compensate your volunteers without running afoul of labor laws?

The rule of thumb should always be to keep volunteering and paid work completely separate. They should have a different handbook, and anyone who wants to do both should be clearly informed of the differences. Letting hourly workers continue their usual work off the clock is illegal. However, if your hourly workers want to show up for a weekend volunteer event, they can—provided everyone is clear that this is not a part of their employment, and they aren’t required to pitch in.

Volunteers can be compensated with small gifts, like t-shirts or coffee cups, or reimbursed for things like transit or meals. But if you offer a stipend over $500 annually, they are no longer volunteers. And even if you pay an amount below $500, you still have to withhold taxes.

What Is a Volunteer?

If you’re categorizing a worker as a volunteer, it’s important to be sure they fit the legal definition of a volunteer. Otherwise, you could be on the hook for failing to provide a just wage and the benefits and protections expected for employees.

The basic definition is this: 

  • Someone who works for a public service, religious, or humanitarian objective, 
  • does not expect or receive compensation, and
  • does not displace genuine employees.

The first part is a given, since you’re a nonprofit. The second is also easy; you know if you’re not paying someone. The third means that you can’t lay off employees and replace them with volunteers. If the job should be done by an employee, just hire one!

Here are a few traits of volunteer work:

  • The entity benefiting from the volunteer work is a nonprofit.
  • The activity is less than a full-time occupation.
  • The services are offered freely and without coercion.
  • The services are of a kind typically associated with volunteer work.
  • No regular employees have been displaced to accommodate the volunteer.
  • The volunteer does not receive or expect any benefit from the nonprofit.

As explained above, you can give volunteers swag or stipends. But be careful these do not amount to over $500, even if they aren’t in cash. That could turn your nonprofit’s volunteers into employees —against their wishes and yours!

When Do You Need an Employee?

Too often, necessity decides whether you staff your nonprofit with volunteers or employees. If you can’t pay employees, you use volunteers. If you can’t find volunteers, you hire employees. But making the decision that way doesn’t lead to picking the right person for the job.

Some jobs are best done by volunteers. For instance, counseling from a volunteer community member may be more helpful than what a paid outsider could provide, if the volunteer shares life experiences in common with the person they’re helping. Volunteers can be ideal for tasks that don’t take many hours a week. You may choose to train volunteers to give more members of the community the advantage of the skills they learn with you. 

However, some jobs really need a dedicated, paid employee. The huge advantage employees have is that they can spend more hours a week at your nonprofit. It’s unlikely that a bookkeeper can get the job done in a few hours after their day job. As your nonprofit grows, jobs that used to be easily managed by a volunteer on the weekends will start needing a full-time paid employee.

Remember that employees at a nonprofit are governed by all the same labor laws regulating employment at businesses. Be sure to deduct the correct taxes and follow all appropriate regulations.

Need Help?

As your nonprofit grows, you may move from a few volunteers to many paid staff and a large volunteer base. Are you prepared for the changes ahead? Sitting down with a financial advisor can help make sure your procedures and policies are ready for the big leagues. Contact us today to find an advisor experienced with nonprofits and ready to help you.

You might also enjoy
group of people using laptop computer
Employment Tax Basics

How can you save money without reducing your workers’ salary? One way is by being smart with employment taxes.

Ready to Get Started?

Advice Chaser includes people from all walks of life, committed to helping you find the advisor you need and at no cost to you.

Interested in more?

Your financial plan is as unique as you are. We partner with businesses all over the U.S., so that we can help you connect with the right options, all at no cost to you.