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By Erin Gloeckner
With Halloween swiftly approaching, I’ve been humming ‘Monster Mash’ and craving anything pumpkin-flavored. A few nights ago I went shopping for dog food, but found myself drawn to the cheap-but-adorable doggie Halloween costumes. I came home with a bag of food and a hilarious Frankenstein costume for my dog, The costume reminded me of a workshop I presented recently: The Frankenstein Effect: the Risky Transformation of Volunteers into Employees.
Questions about worker classification are some of the most common requests for RISK HELP that we receive from our Affiliate Members. Whether it’s exempt vs. non-exempt employees, employees vs. volunteers, or unpaid vs. paid interns, we all get confused about classification sometimes. During this Halloween season, take a hard look at your classification practices to prevent or correct any treacherous transformations at your nonprofit. Read on for a few tips on employee versus volunteer classification from The Frankenstein Effect workshop.
The Frankenstein transformation is a risky one for both your nonprofit and your volunteers. If one of your volunteers is deemed an employee, your nonprofit could owe back taxes, penalties, and even payments to that individual, including wages, overtime (if applicable) and access to employee benefits. As a volunteer crosses the line to become an employee, that individual may no longer be protected by volunteer-centric regulations, such as the Volunteer Protection Act, which only applies to volunteers who are not compensated more than $500 per year. Similarly, by offering volunteers thank-you gestures such as compensation or gifts, you could be unknowingly bestowing taxable gifts, or you could simply be causing volunteers confusion in regard to their role in your nonprofit. What scenarios might cause a volunteer to claim employee status or to evolve into an employee role?
The challenge is that ‘volunteer’ may mean different things to different people. Discrepancies in the colloquial usage of the word may lead us to misunderstand the true, legal definition of a volunteer. For example, would you consider a person a volunteer if she worked in a community garden in order to take home some vegetables? What about an employee who is paid to volunteer at a charity with his corporate team? Or a lawyer who offers pro-bono (free or discounted) services to disadvantaged community members? What about a Peace Corps Volunteer, whose title includes the word ‘volunteer,’ but who receives a monthly living allowance and other benefits? The definition of ‘volunteer’ may not be entirely clear to you, and this confusion can lead nonprofit leaders to misclassify volunteers/employees.
Remember that the key difference between employees and volunteers is that employees are compensated in exchange for their work, whereas volunteers give their time and effort freely with no expectation or promise of compensation. This means that volunteers should not be coerced, and they should not expect or be promised any type of payment in exchange for their time or services. Still, many of us wish to offer thank you gifts or small rewards to show our appreciation for volunteers. How can we do that safely?
No matter what ‘volunteer’ means to you personally, the term should have a clear meaning at your nonprofit. Follow the quick tips above to ensure that you reward volunteers appropriately and clarify their volunteer status. For more help preventing Frankenstein transformations at your nonprofit, consider joining our Affiliate Member Program to access RISK HELP. If you specifically need tips on exempt vs. non-exempt employee classification, read our popular article: Classification Conundrum.
Erin Gloeckner is the former Director of Consulting Services at the Nonprofit Risk Management Center.
“First let me congratulate you on a conference well done. I had a great time at the Nonprofit Employee Benefits Conference and walked away with some valuable tools and questions that we’ll need to be addressing in both the short and long term. Thanks to you and your staff for all you do to provide us with quality resources in support of our missions.”
“BBYO’s engagement of the Center to conduct a risk assessment was one of the most valuable processes undertaken over the past five years. Numerous programmatic and procedural changes were recommended and have since been implemented. Additionally, dozens (literally) of insurance coverage gaps were identified that would never have been without the work of the Center. This assessment led to a broker bidding process that resulted in BBYO’s selection of a new broker that we have been extremely satisfied with. I unconditionally recommend the Center for their consultative services.
“Melanie Herman has provided expert, insightful, timely and well resourced information to our Executive Team and Board of Directors. Our corporation recently experienced massive growth through merger and the Board has been working to better integrate their expanded set of roles and responsibilities. Melanie presented at our Annual Board of Director’s Retreat and captured the interest of our Board members. As a result of her excellent presentation the Board has engaged in focused review which is having immediate effects on governance.”
“The Nonprofit Risk Management Center has been an outstanding partner for us. They are attentive to our needs, and work hard to successfully meet our requests for information. Being an Affiliate member gave us access to so many time- and money-saving resources that it easily paid for itself! Nonprofit Risk Management Center is truly a valued partner of The Community Foundation of Elkhart County and we are continuously able to optimize staff time with the support given by their team.”
“The board and staff of the Prince George’s Child Resource Center are extremely pleased with the results of the risk assessment conducted by the Nonprofit Risk Management Center. A thorough scan revealed that while we are a well run organization, we had risks that we never imagined. We are grateful to know that we have now minimized our organizational risks and we recommend the Center to other nonprofits.”
Great American Insurance Group’s Specialty Human Services is committed to protecting those who improve your communities. The Center team has committed to delivering dynamic risk management solutions tailored to nonprofit organizations. These organizations have many and varied risk issues, hence the need for specialized coverage and expert knowledge for their protection. We’ve had Melanie speak on several occasions to employees and our agents. She is always on point and delivers such great value. Thank you for the terrific partnership and allowing our nonprofits to focus on their mission!