Self-Funded for Unemployment? There’s Relief!

If you’re like many nonprofit leaders, you find yourself in the painful position of having furloughed or laid off employees in the past few weeks.

If your nonprofit chose to self-fund your unemployment insurance, you may have found yourself in the double financial bind of feeling forced to cut staff while also having to reimburse Wisconsin’s unemployment trust fund for unemployment benefits claimed by those staff members. (For a clear description the options nonprofit organizations have for funding unemployment benefits, see this page from the National Council of Nonprofits.)

Relief for self-funded nonprofits has come in two forms.

First, under a provision of the CARES Act, the federal government will reimburse state unemployment trust funds for 50% of unemployment benefits paid against claims made by employees of self-funded nonprofits who are out of work as a result of the COVID-19 pandemic.

Second, Wisconsin legislation that become law last week states that “if a claim … is related to a [Public Health Emergency], regular benefits for that claim for weeks occurring after March 12, 2020, and before December 31, 2020, not be charged to an employer’s [Unemployment Insurance] account.”

In other words, if you are a self-funded nonprofit, you need not reimburse the state for any unemployment benefits your former employees claim as a result of the pandemic. You still need to comply with any Department of Workforce Development’s reporting requirements, but you need not worry about the cost of those claims.

If you haven’t already done so, you may wish to revisit your cash flow projections and scenario plans to incorporate this significant change.

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