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Monday, April 4, 2016

Gearing Up for a Higher Minimum Wage: Part 2

Posted by tschulte

Is Your Nonprofit Ready For Higher Minimum Wages?

In the first part of this blog series, we looked at the impact of Los Angeles County’s new minimum wage law on area nonprofits. If you remember, the minimum wage in LA is scheduled to rise from $10 to $15 over the next four years. The next bump goes into effect July 1, 2016, when minimum pay will jump to $10.50 an hour.

The challenge is that many nonprofits are struggling to absorb these mandatory wage increases.

Of Wages and Widgets

“It’s a delicate period for all of us in the nonprofit community,” says Scott Bowling, CEO of the Culver City-based Exceptional Children’s Foundation, which works with special needs children and adults. “We all want higher wages for our staff. But, on the other hand, we can’t just pass on the cost by raising the price of our widgets like a tech company can.”

However, Bowling is grateful the nonprofit has a diversified funding stream to help mitigate the impact of wage increases. A portion of the proceeds from the recent sale of a building have been directed into the endowment to generate a revenue stream of operations.

Cynthia Sewell, President and CEO of New Horizons, believes the hike is going to cause many nonprofits to start thinking outside the box. The nonprofit, which has residential, employment and educational programs that serve adults with special needs, has developed a strategic plan to address the hit on budget which includes ramped up fundraising efforts. “We’re writing grants, ramping up our personal outreach through our major gifts program, and holding special events like our Gala in June, whatever we can do to address this added expense.”

An Action Plan Unfolds

Caron Nunez and her team at Lincoln Training Center have put together a plan to reduce costs as well as review some of the state contracts they have to provide meaningful jobs for adults with disabilities. “We’re encouraging the state agencies to build in a clause that would increase reimbursement in response to changes in the minimum wage,” Caron says.

To that end, Bowling shares that the Exceptional Children’s Foundation is busy working with other nonprofits to educate California legislators about the true impact of mandatory wage increases. “The new minimum wage law was well intentioned, but I believe there are certainly going to be some unintended consequences,” Bowling says.

“The gap between Government funding for our nonprofits, and the cost of operating (even the most efficient) organizations is widening. Nonprofit leaders and their Boards are more compelled than ever to partner with community businesses and Foundations to fund the advancement of our missions. Our call to action is to engage in your local nonprofit through volunteerism, advocacy and philanthropy. The outcome of engagement is healthier communities for all its citizens.”

Don’t hesitate to contact us here at Armanino if your nonprofit has questions about the impact of the new minimum wage law. We pride ourselves on staying on top of issues impacting the nonprofit sector and are happy to share what is working with other nonprofit clients.


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