Remembering the true cost of employees is crucial for non-profit organisations as their most valuable resource is their people, who drive the services and objectives. As employee costs may be challenged by funders, it’s vital to fully reflect and support these costs in budgets, especially when considering new positions.

Understanding “full cost recovery” is key for financial viability and sustainability, whether revenue comes from grants or service charges. It involves identifying and budgeting for all relevant employee costs to be covered by incoming revenue. The true financial cost of an employee amounts to 1.25 to 1.4 times their monthly salary, according to the US Small Business Administration!

To help remember the main elements for an employee’s budget, consider the following:

• Estimated overtime and bonus payments
• Statutory contributions (e.g. UIF employer’s contributions, annual COIDA assessments, Skills Development Levy)
• Company contributions for benefits like medical aid and pension
• Training and ongoing development costs for staff competence and motivation
• Employee professional subscriptions, if necessary for practising their profession while employed
• Staff wellness support for a healthy and effective organisation
• Equipment, both for new employees and for existing employees with equipment in poor condition
• Additional space costs for new employees

By factoring in these elements, organisations can ensure their budgets reflect the true costs of their people, leading to financial success.