How It Works
As 501(c)(3) nonprofits, we have unique options to help us reduce the effect unemployment insurance has on our budgets.
Most businesses are required to pay for unemployment claims. But unlike for-profit businesses, 501(c)(3) nonprofits have options to help us strategically manage these payouts and reduce the cost on unemployment insurance in our budgets.
Nonprofits can pay for unemployment claims just like for-profits through our state’s unemployment insurance tax; or we can become a reimbursing employer and pay the state only for claims paid out to our former employees. If a nonprofit decides to reimburse, we can end up paying substantially less than if we just paid the state tax.
How Unemployment Taxes Work
Each state maintains an unemployment pool that employers pay into on a per-employee basis based on their state’s taxable wage base and their individual tax rate (based on claims history and other factors). Money in the pool is combined and used to pay all employer unemployment claims in the state. Nonprofit employers generally have lower staff turnover, so we end up subsidizing the higher cost of for-profit employers in the pool.
Traditionally, it is estimated that nonprofits pay $2 into the unemployment pool for every $1 we end up paying in unemployment claims and as a result lose tens of thousands of dollars from our budgets every year.
How the Nonprofit Unemployment Insurance Tax Advantage Works
In 1972 a new section (Section 3309a) was added to the Federal Unemployment Tax Act as contained in the Internal Revenue Code. It states that state unemployment programs must allow 501(c)(3)s to elect whether (a) to contribute to the state program in accordance with state law or (b) to pay into the state program annually an amount equal to the actual unemployment benefits paid out by the state program on account of employment services previously provided to the organization.
In short, nonprofits have the option to only pay the unemployment claims for which we are liable – dollar for dollar.
So what does 501(c) Agencies Trust do?
Simply, 501(c) Agencies Trust is an organization that helps 501(c)(3)s handle the practice of not paying the state unemployment tax and only reimbursing for claims. We are the oldest and largest such organization in the country.
Technically, we are a grantor trust governed by a board of trustees made up of our participating nonprofits that provides the legal, financial and administrative resources necessary for us to manage our own unemployment claims process.
We provided the assistance nonprofit organizations need to:
- Opt-out of the state unemployment insurance tax system and become reimbursing employers.
- Manage, audit and protest any unemployment claims they may face.
- Reduce layoffs and unemployment costs – thereby saving money.
Can 501(c) Agencies Trust save your organization money?
Our program can typically save organizations with over $1 million in gross annual payroll up to 40% on their state unemployment insurance. Savings are dependent upon an organization’s state tax rate and unemployment claims history.
We conduct free assessments to determine if our program is right for your organization.
CLICK HERE for a free assessment to determine if your organization will benefit from using 501(c) Agencies Trust.
Our informational resources are designed for one-to-one human communication with a minimal use of automated technology.
The most effective way to reduce the cost of unemployment claims is through organization-wide education and training. When you utilize 501(c) Agencies Trust, you receive unlimited access to our entire suite of education services.
These services are based upon a one-on-one relationship. We always strive to offer real-time human interaction and minimize the use of password-protected resource sites, automated programs or impersonal call centers.
We offer more than 50 instructor-led, web-based training sessions per year, most of which are qualified for continuing education credit. Working with 501(c) Agencies Trust provides every supervisor and every HR professional in your organization unlimited access to our training opportunities.
Sample some of our educational offerings, live or on-demand, here.
Practiced Unemployment Consultation
Do you want to learn the ins and outs of the unemployment bureaucracy in your state? We didn’t think so. That’s why we have in-house experts to answer your questions and provide immediate education. Often times we know more than your state bureaucrat.
HR Services Hotline
A sound human resources function is important, and mistakes can be costly. It’s comforting to have an HR professional on call, especially if you aren’t one yourself. And if you are one yourself, you know how comforting it is to get a second opinion!
Our mission may be unemployment-related, but our HR professionals think broader than that! You can contact them for advice on any HR-related topic, not just unemployment.
We are proud to offer the largest and most experienced claims assistance and customer service team in the industry.
At 501(c) Agencies Trust, you are a reimbursing employer and only pay dollar for dollar on all valid unemployment claims. Therefore it is very important that you have a practiced claims department at hand. And that’s what we provide.
Everyone at 501(c) Agencies Trust is assigned a dedicated claims consultant – someone who knows you and your organization not just the ins and outs of each specific state. Your claims consultant expands your organization’s ability to manage, reduce and contest unemployment claims.
But these claims consultants are only your first layer of service. A team of unemployment experts supports every claims consultant. This team audits your incoming claims for errors and helps you strategically plan and calculate layoffs.
Also serving you are our nonprofit HR professionals who train your organization on how to better manage talent in hopes of avoiding layoffs through better hiring and discipline. And finally, we provide you with experienced hearing representatives to help you protest claims if necessary.
All of this allows you to save as much as 40% on your unemployment costs every year.
Our programs are designed to not only safeguard our organizations but save them money as well.
Working with 501(c) Agencies Trust is not just about the strategic health of our organizations but also about their dollars and cents. We participate because it is a money saving exercise. 501(c) Agencies Trust helps us hold on to those funding dollars that we have worked so hard to obtain.
A very important part of being a self-insurer is maintaining smart control over our cash flow. That is why 501(c) Agencies Trust maintains an unemployment claims savings account for our future unemployment claims, offers reemployment services to our separated employees, and facilitates a group purchasing program to reduce the cost of completing our missions.
Individually Owned Accounts
All of us at 501(c) Agencies Trust have an individually owned savings account that unemployment claims are paid from. This way there is no risk pool (like with the state) and we are able to build up protected reserves for future layoffs at a speed we can afford. Funds in our accounts earn interest income based on 501(c) Agencies Trust investments. The Board of Trustees, comprised of participating organizations, carefully monitors all investments. 501(c) Agencies Trust has a conservative investment policy where 70% is in cash and bonds. Historical past performance has had a healthy return.
Beginning in October 2016, we are pleased to offer our participating employers a complimentary suite of reemployment services for all separated employees. Studies show that job seekers can improve their chances of landing a job by more than 60% with the right help. Accelerated hiring saves our organizations money in the form of reduced unemployment benefit charges.
All separated employee will have access to a robust online portal of services and most laid-off employees will receive services that includes a live, personal motivational coach to assist with interview preparation and job sourcing.
Plus, reemployment services show that as nonprofits, we really do care about our employees – even those we are forced to lay off.
To find out if your pending layoff qualifies for this free service, please call 800-442-4867.
501(c) Agencies Trust participants also control our overall operational costs through an exclusive discount program. The program, called PurchasingPoint®, is available to us through a partnership with the National Human Services Assembly. PurchasingPoint has access to more than 200 vendors with contracted discounted rates that allows us to save almost 30% on items such as office supplies, shipping and printing. These savings on overhead provide more money for mission-related programming.
Becoming a reimbursing employer is a strategic decision. Doing so with 501(c) Agencies Trust helps insure our organizations are saving budget dollars.
We’ve taken every precaution, and designed a few news ones, to protect ourselves in every way.
The 501(c) Agencies Trust has been providing an unemployment savings program for nonprofits longer than anyone else in the industry. Our program has been copied but never equaled, particularly in the area of providing safety and protection.
If you’re looking at an unemployment savings program, here are some questions you ought to be asking about the security of your savings account:
Is your account private?
All 501(c) Agencies Trust accounts have a private reserve from which our unemployment claims are paid. This account is not shared in a pool. Our money is used only to pay our organization’s unique bills.
Who watches over your money?
The 501(c) Agencies Trust has a volunteer Board of Trustees who come directly from those participating in the program. The Board meets quarterly to review finances and investments, monitor services provided, and watch out for our interests.
Who audits the financials?
Would you manage your nonprofit without an auditor? Of course not. We wouldn’t dream of it either. The Board of Trustees engages an auditor every year, responsible directly to them, to account for the safety of our money.
Are you insured against large unemployment charges?
Only 501(c) Agencies Trust provides industry-leading stop loss insurance from an A+ rated carrier. Unlike other unemployment insurance programs, our money is at less risk from large unforeseen claims. We are protected against such things.
As you can see, we’ve thought of everything. Our success as individual organizations is very important – so we have designed the program to cover every need.
CLICK HERE to review this customizable option.
Reemployment Services – New!
Accelerated hiring saves our organizations money in the form of reduced unemployment benefit charges.
Beginning in October 2016, we are pleased to offer complimentary reemployment services (also known as outplacement), to help former employees of 501(c) Agencies Trust members find a job more quickly after a layoff. And when former employees find work faster, our members save money through reduced unemployment benefit charges!
All separated employees of 501(c) Agencies Trust members are eligible to receive the following at no charge:
- Online Job Search Learning System.
- This interactive training system includes tools such as the following:
- Personality Assessment
- Resume Builder
- Video training on topics such as interviewing, networking, and using social media
- Job Board Aggregator
- And much more!
- Online Job Club. This is a weekly seminar in which job-seekers receive group coaching and have a chance to network and share experiences with fellow job seekers.
In addition, qualified layoffs may be eligible for 6 months of access to a professional, motivational job coach to assist with all aspects of their job search. These coaches specialize in working with nonprofit organizations, ensuring that our employees are receiving the best care possible. Only 501(c) Agencies Trust provides this benefit at no additional charge to our members!
Studies show that job seekers consider themselves unprepared and untrained in the skills necessary to find a good job. Reemployment services provide job search skills and motivation that can improve the chance of landing a job by more than 60%.
Plus, reemployment services show that as nonprofits, we really do care about our employees – even those we are forced to part with. And our community goodwill is protected because 95% of employees feel better about employers who provide reemployment services.
To find out more about this free member service, please contact us.
This benefit is provided to 501(c) Agencies Trust members through a partnership with NextJob, a leader in next-generation reemployment services and a frequent contributor to the nonprofit sector. NextJob provides creative solutions and delivers state-of-the-art reemployment services with an emphasis on efficiency and effectiveness.