Lack of Retirement Savings Threatens Future of Nonprofit Field

To the Editor,

Sara Herschander’s recent article, “Nonprofit Employees Often Can’t Afford Basics, New Report Finds” (September 10), did a good job of highlighting the financial hardships so many nonprofit workers experience daily, as detailed in the 2024 ALICE in the Nonprofit Workforce report.

However, the report did not explore another critical problem facing the nonprofit work force: the struggle to achieve financial security in retirement. As Herschander points out, many nonprofit employees “live in households that cannot cover the cost of essentials like housing, food, and health care, despite having steady full- or part-time employment.” It’s not a leap to think that they also aren’t able to set aside adequate retirement funds. Not only is this unjust but it also threatens the long-term stability of a field that seeks to improve society.

One broad way to bolster retirement security for nonprofit workers across the country is through federal policy changes. Nonprofits employ 10 percent of the private work force but are not included in the federal SECURE 2.0 Act, which incentivizes for-profit employers to offer retirement benefits, such as 401(k)s, through tax credits. New legislation introduced in August seeks to address this omission. The bipartisan “Small Nonprofit Retirement Security Act of 2024,” co-sponsored by Republican Senator James Lankford of Oklahoma and Democratic Senator Catherine Cortez Masto of Nevada, would extend retirement plan subsidies to nonprofits.

In the meantime, nonprofits themselves should institute changes that help employees prepare for retirement. That includes proactively offering retirement plans to part-time workers, covering administrative costs typically borne by plan participants, and making non-elective employer contributions. These measures not only improve nonprofit workers’ retirement prospects but also enhance the organization’s ability to attract and retain talented staff.

Grant makers also need to take a more holistic approach to funding, acknowledging that strong, stable organizations require well-supported staff. Unrestricted funding is crucial so foundations and donors can support their grantees’ employee benefits programs, including retirement savings plans.

Everyone deserves to retire with dignity. Nonprofit workers are on the front lines of society’s most pressing challenges, making a difference every day. It’s high time the field ensures these devoted individuals can look forward to a secure retirement after a lifetime of service.

George Guerrero
CEO
Just Futures