Investing in own well-being
Non-profit helps its employees save with 401(k)
Nicole Peña got a worrisome glimpse of a possible future when she began working at the Phoenix Rescue Mission.
“I was helping an elderly woman to her car one day with a food box and she was telling me how she had worked for a non-profit for 20 years,” Peña recalled. “She really had no re- tirement, no savings.”
It was a wake-up moment for Peña, now director of community relations for the Phoenix Rescue Mission. “It had come to this in her life, relying on the very social services she had worked for to make ends meet,” she said. “I just knew I had to do something to take care of myself for the long term.”
One thing Peña decided to do, joined by many other Rescue Mission workers, was get more involved in the group’s 401(k) program. Fortunately, the charity’s leadership also recognized that something needed to be done, under- scored by what had been a low participation rate in the retirement plan.
The non-profit brought in a financial-services team to help explain to workers the benefits of putting money into the 401(k) plan. These include having access to a diverse lineup of investments, tax-sheltered growth, employer matching funds and an ability to deduct savings from each paycheck automatically.
Plus, the Rescue Mission, which provides meals, shelter, drug counseling and other services, picked up the tab for all
third-party administration, recordkeeping, consulting and advisory fees. This allows workers to stretch their investment dollars further.
The effort is working. From just 14 active participants in 2010, 40 Rescue Mission workers now are saving in the program, out of a paid staff of around 70. Total employee assets jumped from about $180,000 three years ago to around $580,000 now, though per-capita dollar numbers haven’t risen much due to the influx of so many participants. The program started in 2004.
“It really gives people here an added sense of security,” said Marlena Padron, another Rescue Mission employee who participates in the 401(k) program. “This helps us do what we tell others, which includes saving money, putting so much in the bank, tithing and so on.”
Places like the Phoenix Rescue Mission and other humanservice non-profit groups rise in the public’s consciousness this time of year, around the holidays. But the focus typically is on how these groups help the needy, with less thought given to the welfare of non-profit workers themselves.
Many charity employees value their work but struggle to build their own financial security. A survey of 1,000 full-time employees released earlier this year by the TIAA-CREF Institute revealed that most are extremely or very satisfied with their jobs. They’re also motivated less by monetary rewards than by personal satisfaction and the purpose of their work — a combination that can leave them financially vulnerable.
Most non-profit respondents said they have access to workplace retirement plans — 69 percent work for entities offering a 401(k), 403(b) or similar defined-contribution program, where employers typically offer matching funds to encourage workers to save and choose suitable investments. Thirty percent said they are covered by traditional pensions, where employers mostly put in money and make investment decisions on behalf of workers.
Yet 45 percent of non-profit workers said they aren’t satisifed with their retirement preparations, mirroring anxiety among Americans in general on this topic. This suggests that non-profit workers, like those in many other industries, aren’t taking full advantage of their programs, hindered in part by a lack of financial literacy and education.
“Employees feel unable to prepare financially for personal goals, such as comfortable retirement,” the TIAACREF report said. “There is a lack of information and confidence among non-profit workers regarding personal finances, particularly as regards retirement planning and saving.”
When the Phoenix Rescue Mission decided to bolster enthusiasm for its 401(k) plan, it brought in a third-party team charged, in part, with educating employees about their choices.
Joe Doku, chief operating officer of Plan Sponsor Services in Phoenix, meets with Rescue Mission staff in group settings two to three times a year and is available for one-on-one discussions. Topics range from understanding investment options to helping workers budget so they can find more cash to funnel into their retirement accounts.
Another factor that has helped boost participation is a revamped lineup of investment. These include model portfolios of mutual funds overseen by Stellar Capital Management of Phoenix that range from conservative to growth and make it easy for participants to select a diversified mix suitable for each person, Doku said.
Before enhancing the 401(k) program, the Rescue Mission’s leadership ran the proposal past many of the donors who give money to the organization. In meetings, donors gave a thumbs-up to the idea.
“We wanted to make sure this is something that donors cared about,” Peña said. “We wanted to make sure they felt this was a good investment, that we should invest in our employees and not just our homelessservices programs.”