3 Reasons HR Compliance is Critical for Non-Profits

Non-profit organizations and charities have a lot on their plate – collectively they are taking on the world’s to-do list with lean staffing and limited resources.  Understandably, non-profits want to focus on their mission, which is the reason for their existence.  With limited budgets and limited time, why should they care about employment law compliance?  We’ve got three really good reasons – beyond the obvious reason that there are legal risks that come with non-compliance, such as fines, penalties and personal liability of directors and officers.

Hiring and Retaining Employees

First, non-profit organizations face an increasingly challenging talent issue.  The Ontario Non-Profit Network has called this “The Non-Profit HR Crisis”. When hiring employees, non-profits often cannot compete with for-profit businesses when it comes to financial compensation. In the past, non-profits attracted high quality employees because they could offer something that many for-profit businesses could not – meaningful work that was making a difference.  They were able to attract great employees because those employees wanted to do the work that was tied to the non-profit’s mission.

Times have been changing though, and more and more for-profit businesses are developing corporate social responsibility programs that encourage their employees to be involved in volunteer work and to give back to organizations in their communities.  For-profit employers are allowing employees to take paid time off to volunteer or are otherwise supporting meaningful work.  They have taken away the leverage that non-profits had in the competition for talent.  And non-profits are feeling this.

In a tough employment market, it is critical that non-profits demonstrate their care for their employees.  At its most basic level, that requires a non-profit to meet its HR compliance obligations.  A non-profit that is not complying with its basic employment law obligations will be hard pressed to convince prospective employees that it cares about its employees, and may also find that it has trouble retaining its existing employees.

Funder Requirements

Second, many funders require that their grantees be in compliance with their legal obligations as a condition of funding, and in some cases, non-profit organizations may be required to demonstrate how they assure continued compliance.  In short, the availability of funding is often tied to compliance.

A key area of concern for funders is around HR compliance.  A funder does not want to find itself in a situation where an employee who was hired with grantor funds is now bringing a complaint against the non-profit organization or starting a lawsuit.

A funder may want assurance that its grantee has all relevant policies in place, that it has a process for updating its policies to ensure that they stay in compliance as the law changes, that they are posting all required information in the workplace and that all other obligations regarding their employees are being met.  That means that a non-profit not only needs to understand its obligations and have the right pieces in place to meet its obligations, it must have a way to stay on top of those obligations and respond to changes in the law.


And third, a non-profit organization’s reputation is one of its greatest assets.  Non-profits are in constant competition for donor dollars.  Donors must make decisions about where they want to place their support, and they make those decisions based on the mission and vision of the non-profit, but also on its reputation.  Donors need to have trust in the organizations that they support – when they provide a financial donation to a non-profit, they need to trust that the organization will carry out its work in accordance with its legal obligations.

A non-profit that has a reputation of breaching its employment law obligations risks losing the trust of its donors.  If the organization isn’t meeting its legal obligations to its employees, what else isn’t it doing right?  In addition to the trust issue, many donors simply may not want to support a non-profit that does not treat its employees well – and a failure to comply with employment laws may well be seen by donors as a mistreatment of employees.  It doesn’t matter if the non-compliance was inadvertent or caused by mistake or misunderstanding, which is almost always the case.  The damage is done.

The non-profit sector is doing highly valuable work, and it is doing it with very limited resources.  Understandably, non-profits need to very carefully allocate their limited time and resources, which means focusing on tasks that are really important.  HR compliance is one of those tasks.  The backbone of every non-profit is its employees – they are the ones carrying out the work and advancing the mission.  A non-profit’s very ability to carry out its work depends on its compliance with employment laws – its ability to hire and retain employees, its ability to obtain funding, and its reputation in the community are all directly affected by its compliance.

How Compliance Works Helps Non-Profits

Staying on top of compliance deadlines and constantly changing employment laws can be challenging and time consuming for all employers, and even more so for non-profit organizations and charities who often have more limited resources. Compliance Works provides timely updates on changes to employment laws across Canada and our Latest Updates ensure that you never miss a change.

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Contact us to Request a Demo , subscribe to Compliance Works publications, or email us at info@complianceworks.ca to learn how a paid subscription to Compliance Works can help your HR team succeed.

About the author

Gayle Wadden
Gayle Wadden CLO, Compliance Works
Gayle Wadden is a senior lawyer with deep experience in employment and corporate law. She is responsible for overseeing Compliance Works’ legal content.

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