3 Key Factors When Choosing Between Employees and Volunteers

June 2022

Nonprofit managers are making human resources decisions in the context of a complicated economic recovery from the COVID-19 pandemic, while also dealing with the inflationary fallout from the ongoing war in Ukraine. Job candidates have continued to gain leverage in the hiring market, but rising consumer prices have decreased the purchasing power of workers and organizations alike. Employers are also still adjusting to the jarring trend toward hybrid work environments as employees ask for greater flexibility and a better work/life balance. These shifts, among others, have made it harder for nonprofits to compete for and retain top talent, especially as they continue to work past other hurdles related to the pandemic.  

Your organization might respond to these conditions by taking on skilled volunteers in various roles to reduce payroll costs and move scarce resources to other parts of your budget. Many nonprofits use professionalized volunteers in management positions and other jobs throughout their organizations. However, this approach brings its own challenges, including the potential for conflict among volunteers and paid staff, as well as the legal considerations around the designation of volunteer work. You should thoughtfully weigh the costs and benefits of recruiting volunteers for various positions in this uncertain hiring environment. Here are three key factors to consider when deciding whether to take on new paid employees or volunteers. 


1. Job Market Outlook 

The Great Resignation has continued apace as employees switch jobs and industries at historically high levels. Human resources departments have faced increasing difficulty in securing quality talent as the labor market has tightened over the past several months. You may therefore have less leverage and financial flexibility when filling paid staff positions. In this context, you should recognize that hiring and keeping quality candidates may be more difficult for the foreseeable future, which may open up avenues for recruiting highly-skilled volunteers. 

Labor-friendly Job Market

The job market continues to favor job seekers and will continue to do so over the next few months. In April, unemployment dropped to a relatively low rate of 3.6% and with demand for workers outstripping supply, 4.5 million people felt confident enough to quit their jobs in April. This followed on the heels of job openings and quitting rates nearing record highs in December 2021. Even more starkly, two in five professionals will soon leave or have recently left their positions. 

As much as these developments may feel like a headache from a payroll perspective, you should avoid catastrophizing about the impacts of these changes. Increases in the nonprofit employees' leverage can create positive knock-on effects in the sector by improving compensation and working conditions for all employees. This shift can lead to better employee satisfaction and retention in the long-run, potentially mitigating turnover.

Increased Labor Costs

In the current environment, employers are paying more both in absolute and proportional terms for labor costs than before. On one end, wages rose another 0.3% in March, totaling a 5.5% increase since last April. This dovetails with changing expectations on the part of workers for increased compensation and benefits. On the other end, consumer price inflation hit 8.3% in April and will continue to erode organizations' spending power in other areas.

Employees demanding better compensation packages also should not be viewed in wholly negative terms, especially if this changes the status quo of paying staff poorly in nonprofits. This can hopefully contribute to a paradigm shift around adequately compensating employees as a priority before other spending needs. In the immediate term, however, these demands have the potential to threaten other spending priorities, so managers must handle them wisely. If a new employee cannot be onboarded without sacrificing many other budget items, then consider shifting the position to one with volunteer status.  


2. Trends in Hiring Process 

In addition to demands for higher compensation, employees are seeking greater flexibility in their working arrangements from their employers, including around hybrid work. You should adjust positions to meet these desires, while also balancing the long-term strategic goals of your organization. These changes, along with issues around retention, would likely apply to both paid and volunteer positions, so consider how feasible they are to implement. 

Flexibility and Well-being

Employees are negotiating for greater flexibility at their workplaces, as well as a heightened focus on their well-being. Workers are 2.5 times more likely to apply to remote jobs, which could be a paradigm shift for an organization that structures its workflow around a physical office space or a particular community setting. Job candidates also want more flexibility in their working arrangements and schedules, which can be challenging for organizations that adhere to strict programmatic schedules. Lastly, these candidates want their employers to place a greater focus on their holistic well-being and mental health, which can unfortunately be lacking in the nonprofit sector where staff operates with scarce resources and expectations of overcommitting to responsibilities. 

Retention Challenges

Retaining top talent may become increasingly difficult in the future as career norms and choices shift significantly. Employees have continued to express lower feelings of loyalty to their organizations than those of previous generations, while greater numbers of employees opt to work as freelance and gig workers. Both of these trends might threaten the effectiveness of investing time and money into candidates with the aim of binding them to the organization for a long period. 


3. Other Challenges and Opportunities 

If you decide that taking on volunteers is less risky than recruiting certain paid staff, you should keep in mind that there are both significant risks and opportunities with this approach as well. You should consider the potential for conflict around volunteers working in positions similar to paid workers, as well the legal perspective involved when taking on volunteers in positions similar to those for paid employees. 

Role Conflict

You should weigh the potential risks of using volunteers in roles comparable to paid staff, while also giving those employees a voice in the hiring process. While research has uncovered mixed results on the effects of using volunteers in this way, placing them in management positions can sometimes increase turnover among paid staff if their roles are too similar. Even if this practice does not result in increased turnover, it can still create a large administrative burden for the organization. Regardless, paid employees should have a say in the process to avoid conflict and ensure accountability. 

Employee-Volunteer Boundary

You should also refamiliarize yourself with current legal views on the employee-volunteer boundary to avoid potential conflicts in that area. Recent interpretations of the Fair Labor Standards Act (FLSA) stress that volunteers should not expect any kind of economic benefit as a result of their service, whether of in-kind compensation or other forms. While these rules are not typically enforced with an iron fist, employers should be cautious when using volunteers in commercial settings and avoid promising material compensation, even in the form of discounts or priority shopping. As organizations reopen their physical operations and reintroduce their sales and commercial activities, managers should use caution since these activities are often the most difficult to navigate under the FLSA.

While you may be confronted by many jarring changes in the hiring landscape, you can also take advantage of many new opportunities and emerge more resilient than before the pandemic. On one hand, this moment can also serve as an opportunity to implement fundamental changes to the operations and norms around human resources, which may increase employee longevity in the sector in the long run. On the other, you should thoughtfully consider the available options for recruiting talent on a paid or volunteer basis. 


Additional Resources and Readings:

April Jobs Report by ABC News

August Jobs Outlook by The Hill

April 2022 CPI by the Bureau of Labor Statistics

Hiring Process in 2022 by SGEngage Podcast

Workplace Report by Gallup

The Effect of Volunteers on Paid Workers' Excess Turnover in Nonprofit and Public Organizations by Review of Public Personnel Administration

A Legally-Informed Definition Of Volunteering In Nonprofits And Social Enterprises: Unpaid Work Meets Profit Motives by Nonprofit Management and Leadership


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