It was the shot heard ‘round the dot-org world of Illinois: the Prairie State’s minimum wage would be changing to $15 per hour. Reactions from the nonprofit community were swift and varied:
- “It’s good for the people we serve—they’ll soon be making a living wage.”
- “There might be fewer people who need our help now.”
- “Just another unfunded mandate we have to follow.”
- “I’m not sure how we’ll be able to afford our frontline staff when this all kicks in.”
It’s a revolutionary change—raising the minimum wage by nearly 50 percent. But the new rate ramps up gradually, from $9.25/hour this year to:
- $10 on July 1, 2020
- $11 on January 1, 2021
- $12 on January 1, 2022
- $13 on January 1, 2023
- $14 on January 1, 2024
- $15 on January 1, 2025.
“A single parent working a full-time, minimum-wage job qualifies for food stamps, Medicaid and sometimes housing assistance,” noted one sponsor of the bill, Sen. Kimberly Lightbody (D-Maywood), in the Peoria County Chronicle. “A $15 minimum wage would lessen single parents’ and families’ reliance on assistance.”
The changes wrought could be profound. The reduction of demand for basic-needs assistance, for example, could actually be magnified in areas that already have a low cost of living—like here in central Illinois.
Now that the measure has been signed by the governor, how should not-for-profits respond? It’s important to react, but not overreact. Reading the tea leaves, expect the following:
Inflation in the state is likely to rise. Businesses are already beginning to price in the wage increase. Have you received an oil change lately? Get ready for sticker shock.
Recommendation: A nonprofit that charges a fee for service might consider whether that fee needs to edge higher.
Increased Staff Costs
Frontline staff will be more expensive, but still worth every penny. Often the toughest jobs in a charity are the lowest-paid. For overnight shelter staff, food pantry workers and other direct-service personnel, their jobs are essential and numerous. Such jobs sometimes go unfilled.
Recommendation: Phase in volunteers and interns. Baby boomers are finally leaving the workforce—and in record numbers, thanks to a stock market that hit new heights last year. Many have energy, skills and a passion to change the world for the better.
Got an opening for a frontline staffer at your nonprofit? Try a team of volunteers. Give them flexibility, and they’ll return your investment with competence and wisdom. Locally, the Retired and Senior Volunteer Program (RSVP), administered by the Center for Youth and Family Solutions, can be reached at (309) 323-6600. It’s a good place to start.
Our region is also blessed with several colleges and universities whose students are eager for field experience, seeking internships to round out their resumes. Leverage a team of interns—again, flexibility is key—to fill a spot. As one revolutionary once observed, “A penny saved is a penny earned.”
Recommendation: If your organization cannot necessarily use volunteers or interns for minimum-wage jobs, consider underwriting positions with major gifts. For years, institutions of higher learning have provided for essential positions with “endowed chairs.” An innovative solution would be to approach donors to make major gifts specifically for the entry-level staff function or similar positions.
Begin a “donor club” to cover the costs—complete with “exclusive email updates,” letters from success-story clients, VIP seating at events, and other high-value/low-cost perks.
Potential Demand Reduction
Your organization may welcome fewer basic-needs clients—or the number may stay the same(!). If inflation follows suit, $15 per hour may not go as far as politicians think. While fewer clients may be a plus for society, it’s a minus for charity balance sheets. In today’s metrics-driven funding milieu, fewer clients served could equal less money for programs.
Recommendation: Take a fresh look at your organization’s strategic plan. Fewer basic-needs clients may mean a change of direction. Does the plan need updating to explore new service opportunities? Is there another community need you can tackle? What local, societal issue is your organization fit to remedy? Should you add another program? Does adjusting your programs require a mission statement revision? These are excellent (often board-level) questions to explore.
Recommendation: Diversify your organization’s funding streams. If metrics-driven grants are getting smaller by virtue of fewer clients, consider expanding your development strategies. Every organization needs a planned giving strategy, starting with wills and life insurance giving. Even after the recent tax law update, major gifts remain a popular and effective means of funding programs. Corporate sponsorships also remain strong. Give businesses a chance to partner with you, sharing resources and volunteers while gaining exposure and a valuable PR bump.
In 2019, we’re seeing the preamble to serious wage changes coming by 2025. With a little common sense and thoughtful consideration, these don’t have to be “times that try men’s souls.” PM
Phil Newton is founder of Perennial Partners, a Peoria-based consulting practice that helps charities, churches and schools with grant writing, planned giving, strategic planning and more. Call (309) 689-2809 or visit perennialpartnersci.com for more information.