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Nearly 4 in 10 nonprofits self-fund their unemployment

By October 24, 2022February 21st, 2023No Comments

How many nonprofits self-fund unemployment?

Results of a new survey conducted by 501(c) Services indicate that nearly 40% of all 501(c)(3) nonprofits with payrolls over $1 million currently reimburse their unemployment. According to the survey, 55% of those responding pay state unemployment insurance taxes, and 38% reimburse the state for their unemployment claims.

“This is an encouraging poll for us,” said Cynthia Koral, CMO for 501(c) Services. “We’ve been helping nonprofits reimburse for 40 years, and over that time we’ve seen the number of 501(c)(3)s that reimburse grow. We believe that the increased percentage of reimbursers means that nonprofits are actively leveraging all budget-positive financial avenues available to them.”

The goal of the survey was to gauge how many nonprofits across the country pay state unemployment insurance taxes versus those that do not and reimburse the state for their unemployment claims. 501(c) Services polled over 79,000 501(c)(3) nonprofit executives from organizations with payrolls over $1 million.

(Also Read: Numerous States announce 2022 unemployment tax increases)

“Nonprofits have been through a pandemic and maybe walking into a recession,” said Koral. “During periods of economic disruption nonprofits – smartly – double check their operations for waste and efficiency. Unemployment exposure is an area that 501(c)(3)s can uniquely manage. These tax-exempt organizations can not only outsource unemployment administration but can self-fund their own programs. In certain cases, doing so uncovers substantial budget savings. In any case, it’s an option that should be explored periodically.”

The reason 501 only surveyed organizations that have payrolls over $1 million is tied to company philosophy.

“There are organizations that reimburse who have payrolls under $1 million,” said Koral. “However, in our experience, a reimbursing nonprofit saves the most money and experiences a responsible amount of risk if their payroll exceeds $1 million. For the work we do and the organizations we work with, the $1 million payroll threshold seemed to be a good place to focus our research.”

The survey was conducted October 20 – 21, 2022 via email to 68,195 501(c)(3) nonprofits across the United States.


501(c) Services has 40 years of experience providing full-service unemployment management programs. Some programs we administer are 501(c) Agencies Trust and 501(c) HR Services. To see if your organization would benefit from our services, please contact us today.

(Image by Tumisu from Pixabay.)

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