Chapter 23: Hiring Employees and Working with Contractors
Many nonprofit organizations begin with a small group of dedicated volunteers. As programs expand, fundraising grows, and community needs increase, there often comes a time when hiring employees or engaging independent contractors becomes necessary.
Building a professional team allows a nonprofit to increase its capacity, improve service delivery, strengthen organizational leadership, and better fulfill its mission. However, adding paid personnel also introduces new responsibilities, including employment laws, payroll, supervision, financial planning, and organizational management.
Whether your nonprofit hires its first employee or builds a team of dozens of professionals, thoughtful staffing decisions contribute significantly to long-term success.
When Should a Nonprofit Hire Employees?
There is no universal point at which a nonprofit should begin hiring employees.
The decision depends on factors such as:
- Program growth
- Financial stability
- Volunteer capacity
- Community demand
- Administrative workload
- Long-term strategic goals
Some organizations operate successfully for years with volunteers, while others require professional staff from the beginning because of the complexity of their services.
Hiring should be driven by organizational needs rather than growth for its own sake.
Employees vs. Independent Contractors
Nonprofits often work with both employees and independent contractors.
Employees generally perform ongoing responsibilities under the organization’s direction and are integrated into daily operations.
Independent contractors are typically engaged to provide specialized services for a defined project or period.
Examples of contractor services include:
- Accounting
- Legal services
- Graphic design
- Website development
- Photography
- Information technology
- Event planning
- Strategic consulting
- Marketing
- Grant writing
Organizations should understand the legal distinctions between employees and contractors under applicable federal and state laws.
Proper classification is important for payroll, taxes, benefits, and compliance.
Develop Clear Job Descriptions
Every position should have a written job description that clearly explains:
- Primary responsibilities
- Required qualifications
- Expected skills
- Reporting relationships
- Work schedule
- Performance expectations
Clear job descriptions help attract qualified candidates while reducing misunderstandings after hiring.
They also provide a useful framework for performance evaluations and professional development.
Recruit Individuals Who Support the Mission
Technical skills are important, but mission alignment is equally valuable in nonprofit organizations.
Successful nonprofit employees often demonstrate:
- Commitment to community service
- Integrity
- Collaboration
- Communication skills
- Adaptability
- Problem-solving ability
- Respect for diversity
- Professionalism
People who genuinely believe in the organization’s mission often become passionate ambassadors for its work.
During interviews, discuss both the responsibilities of the position and the organization’s purpose to ensure a strong mutual fit.
Understand Employment Responsibilities
Hiring employees creates important legal and administrative responsibilities.
Depending on your organization’s activities and location, these may include:
- Payroll administration
- Employment tax reporting
- Workers’ compensation
- Workplace safety
- Employment eligibility verification
- Anti-discrimination laws
- Wage and hour requirements
- Personnel records
Because employment laws vary by jurisdiction and may change over time, nonprofits should seek current guidance from appropriate government agencies and qualified professionals.
Create an Employee Handbook
As organizations grow, an employee handbook can help establish consistency.
Typical topics include:
- Workplace expectations
- Attendance policies
- Leave policies
- Code of conduct
- Confidentiality
- Safety procedures
- Technology use
- Anti-harassment policies
- Performance evaluations
- Professional development
Written policies help employees understand organizational expectations while supporting fair and consistent management.
Invest in Training
Hiring talented employees is only the beginning.
Providing ongoing training helps staff:
- Improve professional skills.
- Understand organizational policies.
- Strengthen leadership abilities.
- Adapt to changing regulations.
- Improve program quality.
- Enhance community service.
Professional development benefits both employees and the organization by encouraging continuous learning and innovation.
Organizations that invest in employee growth often experience higher retention and stronger performance.
Build a Positive Workplace Culture
A nonprofit’s workplace culture significantly influences employee satisfaction and organizational success.
Positive workplace cultures encourage:
- Collaboration
- Respect
- Open communication
- Accountability
- Innovation
- Diversity
- Inclusion
- Recognition
Employees who feel valued are often more engaged, productive, and committed to advancing the organization’s mission.
Leadership sets the tone through everyday actions and decisions.
Evaluate Performance Constructively
Regular performance evaluations help employees understand expectations while identifying opportunities for improvement.
Effective evaluations focus on:
- Accomplishments
- Challenges
- Professional growth
- Goal setting
- Training needs
- Future responsibilities
Constructive feedback encourages continuous improvement while strengthening organizational effectiveness.
Performance discussions should emphasize both accountability and professional development.
Plan for Organizational Growth
As nonprofits expand, staffing needs evolve.
Future considerations may include:
- Department leadership
- Program managers
- Administrative support
- Financial professionals
- Communications specialists
- Volunteer coordinators
- Technology staff
- Development professionals
Growth should occur strategically and remain aligned with the organization’s mission, financial capacity, and community needs.
Hiring too quickly may strain resources, while delaying important hires may limit organizational impact.
Thoughtful workforce planning helps maintain a healthy balance.
Employees, Volunteers, and Contractors Work Together
Successful nonprofits recognize that employees, volunteers, board members, and independent contractors each contribute unique strengths.
Employees provide operational continuity.
Volunteers expand community engagement.
Contractors offer specialized expertise.
Board members provide governance and strategic oversight.
When these groups collaborate effectively, the organization becomes more capable of fulfilling its mission.
Learning from Experienced Leaders
Managing people is one of the most rewarding—and challenging—responsibilities in nonprofit leadership.
Many executive directors and board members continue strengthening their leadership skills by attending nonprofit conferences, participating in management workshops, studying human resource best practices, and learning from experienced nonprofit professionals.
Community platforms such as Sanj Talks contribute to this ongoing learning by sharing educational resources, highlighting organizations making a positive impact, and bringing together nonprofit leaders, entrepreneurs, volunteers, educators, business professionals, and community members to exchange ideas that strengthen nonprofit leadership and organizational excellence.
Looking Ahead
Building a capable team is essential for delivering programs effectively, but every nonprofit must also protect its people, property, finances, and reputation.
In the next chapter, we will explore risk management and insurance, including practical strategies for identifying potential risks, protecting organizational assets, and preparing your nonprofit to respond effectively to unexpected challenges.
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