Nonprofit salaries are low. Could $1,500 investment accounts help?

Bryanah Wilkins, a nonprofit employee in New Jersey, never thought she’d have enough money to invest. It seemed out of reach on her salary.

“I always felt like, ‘Oh, it’s too much,’” says Wilkins, senior coordinator of program operations at Braven. “I don’t know if I have the money to set aside per month for investments and things like that.”

But a new program open to nonprofit employees in the Newark metropolitan area changed that. Piloted by the United Way of Greater Newark, the program provides $1,500 for nonprofit staff to invest. The program’s goals are to help often underpaid nonprofit workers learn about investing and become more financially stable.

“Some people end up leaving the sector because they simply can’t afford to stay,” says Catherine Wilson, CEO of the United Way of Greater Newark. “We’re incentivizing them not just to be in the market but to be able to stay in this sector.”

How the program works

United Way of Greater Newark partnered with the financial firm Stackwell, which managed the investment accounts and offered education for the 100 nonprofit workers. The program was funded by Prudential Foundation and received nearly twice as many applications as spots available, which were filled on a first-come, first-served basis.

Selected participants did a pre-program survey, which revealed that the majority didn’t have $1,000 saved for an emergency, and 80 percent didn’t believe they had the financial capacity to start building wealth.

“Many of the individual people that are at these nonprofit organizations are one financial shock or one financial risk away from being a part of the constituency which they serve,” says Trevor Rozier-Byrd, Stackwell’s CEO. “We wanted to provide a greater pathway to financial stability and resilience for some of the most important people in our communities.”

Accepted applicants began investing last November. The yearlong program doles out the $1,500 in small chunks to encourage them to invest it like they would their own money — $50 here and there. Participants received their first chunk to invest after completing their initial financial literacy questionnaire.

Interestingly, the pre-program survey results showed New Jersey nonprofit employees had a better understanding of investing and finance compared with statewide data, Rozier-Byrd says. 

We’re not talking about people who don’t know anything about the investment process, he says. “They truly are aware and have a strong desire to participate but just have not seen, historically, the pathway for themselves to do so.”

Participants use Stackwell’s app for finance lessons and to invest in exchange-traded funds that follow major financial indexes, such as the S&P 500. These types of funds are known for being diversified and able to withstand market volatility over long periods of time, Rozier-Byrd says. 

As people see how easy it is to invest, some add their own money into their funds in addition to the stipend they’re receiving, Rozier-Byrd says. Wilkins, for example, began investing $50 a month of her own money after realizing both that it was important and that it was something she actually could afford. While she knew some about investing, she learned about Roth IRAs through the program. When she learned the accounts are a post-tax way to save for retirement, she opened one.

“You learn so much,” Wilkins says. “It gave me the tools to be able to feel like I can do this by myself.” She notes that it’s also taught her consistency, helping her stay in the habit of investing. “My goal is to not give up and eventually increase how much I invest.” 

At the end of the 12 months, Wilson and Rozier-Byrd hope participants leave the money invested and continue adding to their accounts, but people can withdraw funds if needed.

“We would love to see everyone keep as much money in the market as they possibly could, but that’s also not reality,” Rozier-Byrd says. He notes that wealthy families don’t always leave every cent invested, and it’s important for nonprofit staff to have that same financial freedom. 

He wants participants to have financial freedom, “understanding that it is okay to make withdrawals sometimes if that is the practical financial reality that you’re dealing with,” Rozier-Byrd says, “but also understanding that you have built the behavior and you have the confidence to put money back in.”

The program will expand to 6,000 participants in the fall, including new participants in Atlanta and at United Way affiliates in the Bay Area, Southeast Louisiana, Southeastern Michigan, and Tulsa, Okla. Wilson expects Newark to open up additional slots to nonprofit workers, but that is not finalized.

How to do it in your community

Wilson says nonprofits can do this at their own organizations if they have the budget to add an investment allowance. The costs of such programs can vary but would include the stipend for workers and administrative fees to manage the program and investments. The New Jersey program had additional costs to cover a research component, bringing the total to $500,000, but the organizations would not provide a breakdown of the amount spent on research or fees. To fund such a program, Wilson suggests partnering with corporations that have ties to the finance industry.

“It’s time to start having those courageous conversations with funders,” Wilson says. “There are a lot of national funders that want to build economic opportunity and see economic mobility in communities across the country.”

Wilson suggests talking to potential partners about supporting wealth building and helping keep talented staff at nonprofits. To ensure they could bring a strong funding proposal, the United Way of Greater Newark surveyed nonprofit workers in the area about their financial health, which Wilson says ultimately enabled her and Rozier-Byrd to have data-rich, meaningful conversations about the needs for such a program.

When looking for corporate partners, Wilson suggests looking for nonprofit partners that are in the same boat and approaching corporations as a team.

“Come together as a cohort and say, We want this for our work force,” Wilson says. “Here’s how much it costs, but then here’s the return on investment: We have better engaged employees. We have people who are committed to the work. We have people who feel like we’ve invested in them; they stay invested in us as an organization and as a sector.”