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Should the Nonprofit Sector Pay Interns?

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My first internship was in Arlington, Virginia with Young Americans for Liberty (YAL), a nonprofit college activism organization. This internship was my first experience working in an office in a major city.

I learned all about office culture, donor relations, fundraising, chapter building, and membership management. These are skills I’ve carried with me through my career.

Pay Interns

What made this internship possible for me was the fact that not only did YAL pay their interns, but they also provided housing. These factors made all the difference since my family did not have the money to support me while I lived in this expensive area.

I’ve also had unpaid nonprofit internships. However, in order to do those internships, I had to simultaneously work at a paid position on nights and weekends in order to support myself during the internship period.

My paid and unpaid internships have both benefited my career. Yet I’ve since questioned whether or not I should’ve been paid for some of the work I did. It is not easy working multiple jobs in order to support unpaid work.

There are strong arguments for paying interns, and strong arguments for not paying them, and I’ve explored these below. If your nonprofit is looking to bring interns on board for a few months and you aren’t sure whether or not you ought to pay them, hopefully this will help you make your decision.

How much does it cost to pay interns?

Before we get into the arguments for each side, let’s establish just how much it costs to pay an intern:

The average wage for an intern with a bachelor’s degree is $17.69 an hour, which means:

$17.69 x 40 hours/week = $707.60 per week = $2,830.40/month for 3 months = $8,491.20 per summer

A full-time intern can cost over eight thousand dollars for one summer internship (wages may vary based on location of internship and experience of intern).

Obviously that is not cheap.

Argument 1: No, nonprofits should not pay their interns

The perception of unpaid internships has suffered in recent years, but there are still compelling arguments in favor of unpaid internships. Here are four:

1. It saves money

This is the most obvious argument in favor of unpaid internships from the perspective of any organization.

Hiring anyone (paid or unpaid) is a costly process. There are recruiting and marketing costs associated with attracting interns to your organization, onboarding and training costs, and intern work planning. Interns need to be brought up to speed on office culture, trained on their responsibilities, and aided whenever they hit a snag in their work.

This all means time and resources diverted away from your employees’ main responsibilities in order to make sure these interns aren’t sitting around waiting for something to do, which is also a waste of your time and resources.

These investments can be offset by the lack of a bi-weekly or monthly stipend.

2. Some smaller nonprofits can’t afford to pay their interns

If you don’t have the funding, you can’t hope to pay an intern. After all other expenses including salaries, development, renting office space, building and maintaining a website, and purchasing equipment, hiring paid interns is probably not a high priority on your list.

If all internships were required to have a salary attached, some have argued that this would force many nonprofits to abandon their internship programs, causing a net loss of experience for students.

This also means that fewer students will be exposed to the nonprofit world, leading to fewer students gravitating towards that field once they graduate. It’s a loss for both sides.

3. Internships are learning experiences

The biggest reason students apply for internships is the experience they acquire during their time at an organization. When I was a nonprofit intern, I learned a lot about office culture, working in a professional environment, the power of networking, and nonprofit specific skills like fundraising practices and donor relations.

Some of my internships were paid and others were not, but regardless of the pay, I learned a great deal that I still use today here at Capterra.

4. It’s a cost-effective way to screen for potential future employees

Unpaid internships provide a relatively risk-free (money wise) way to screen for potential employees—and at the end of the day, employment is the ultimate goal of most interns.

While interns are provided on-the-job training, these organizations are able to assess the work ethic and quality of work from these potential employees.

The good news for both nonprofits and interns, according to NaceWeb, is that the internship to job conversion rate sits around 51.2%. These conversions from intern to employee reduce the cost of onboarding and training, since most of it has been done already at the start of the internship.

There is a catch though—that percentage is an average of all internships and not all internships have the same conversion rate, according to this chart:

(via Heather R. Huhman)

According to the data, internships in the accounting (59%), computer networking (47%), or management consulting fields (44%) fields have a higher retention rate. Fields such as education management (22%) and recruiting (26%) have lower retention rates. An intern’s likelihood of retention after an internship depends on the field they work in.

Argument 2: Yes, nonprofits should pay their interns

Now that we’ve heard the case for unpaid internships, here are four strong arguments for paying your interns.

1. Paid interns work harder and provide more benefit for your organization

The U.S. Department of Labor (DOL) has six compliance rules for unpaid internships that “for-profit” companies must follow. The most interesting of the rules deals with benefits to these organizations:

The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.

This means that an unpaid internship (for a for-profit company) must not provide any benefit to the employer and in some cases, it may have to be a drain on resources for an employer. This rule is set in place so companies don’t take advantage of free labor.

What does this have to do with nonprofits though?

There is much debate over whether or not these rules ought to apply to nonprofits as well. In fact, Jamie Ray-Leonetti at Nonprofit Pro argues that there are potential issues nonprofits may still face regarding these DOL wage standards:

While it says that unpaid internships are “generally permissible” for a “nonprofit charitable organization,” what the DOL means by “generally permissible” is not defined, and unpaid interns are free to bring an FLSA claim if they choose to do so. The fact sheet goes on to state that the “[Wage and Hour Division] is reviewing the need for additional guidance on internships in the public and nonprofit sectors.”

This is very vague language that states that in most cases, it is okay for a nonprofit organization to hire unpaid interns to do beneficial work for the organization. Unfortunately, what is considered “generally permissible” is not clearly defined in any statute. These kinds of generalities leave the door open for potential lawsuits.

In order to play it safe, nonprofits ought to be careful when assigning responsibilities to unpaid interns, but I’ll get into that more later in the “lawsuits” section.

The point is, this is not an issue when you pay your interns. When paid, your interns are free to be as productive and beneficial to your organization as you and they wish.

Pay may even boost the incentive of your interns to produce higher quality work. According to Deborah Sweeney at Under30CEO, paid interns are more incentivized:

Paid interns are more engaged with their job, and can legally be given the type of work that actually benefits the company. And when you are looking for potential hires, you probably want the candidate with real experience, rather than the one that made copies and went on Starbucks runs.

Wouldn’t you rather reap the benefits of productive interns rather than dance around difficult rules that could cost your nonprofit more money in the long run?

2. Paid interns are more likely to receive better pay and more job offers

They say that your first salary negotiation at your first job is the most important one you will ever have. Your first salary sets the bar for your value throughout your career.

But what about internships?

According to Forbes, those who take unpaid internships are more likely to take lower-paying jobs than those with no internship experience at all. Furthermore, unpaid internships have a lower likelihood of leading to future employment than paid internships:

The National Association of Colleges and Employers conducted a recent survey that questioned the correlation between internships and full employment upon graduation. The findings were astonishing. Hiring rates for those who had chosen to complete an unpaid internship (37%) were almost the same for those who had not completed any internship at all (35%). Students who had any history of a paid internship, on the other hand, were far more likely (63%) to secure employment.

If your nonprofit is serious about opening doors for your interns, the numbers show that paying them is the best way to do so.

3. Paying interns opens doors for lower-income students

Not only does paying your interns create opportunities for them, it also opens doors for lower-income students. Unpaid internships don’t cost much up front for a nonprofit, but as Milton Friedman famously said, “there is no such thing as a free lunch.”

Someone must bear the cost of supporting an unpaid intern, whether that be their family or the interns themselves. In my experience, some interns have sought out other part-time employment in order to support their unpaid experience, which is tough to balance.

Conversely, paid internships create opportunities for lower-income students who might not have parental support, savings, or the extra time to work a part-time job. Paid internships break down this unseen barrier, allowing for more income mobility once these students complete their internships and move on to higher paying careers. Their future salary, as discussed in the previous section, is affected by the nature of their internship.

If your nonprofit wants to ensure that all qualified students have a shot at your internships, then paying your interns will ensure that opportunity for those on the lower end of the income spectrum.

4. Paying interns avoids the risk of costly lawsuits

We’ve already established that the federal guidelines for unpaid internships as a nonprofit are not as clearly defined as they are for those in the for-profit sector, but that doesn’t mean there aren’t risks. While paying your interns costs money, it is peanuts compared to the amount of money spent during a lawsuit.

That’s right, there are cases of interns suing their previous internship providers for back pay. While the DOL compliance rules do include a footnote stating, “Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible”, this doesn’t mean there aren’t risks.

According to For Purpose Law, nonprofits ought to be cautious when delving into unpaid internship territory:

So does this mean that if a nonprofit labels an “intern” a “volunteer,” it’s clear sailing ahead?Like many things in life and the law – not necessarily. That same Fact Sheet 71 footnote includes a caution: There is a “. . . need for additional guidance on internships in the public and nonprofit sectors.”To date, there’s been no such clarification, although the existing regulations under the Fair Labor Standards Act include a definition of “volunteer.” A person is a “volunteer” and not an employee, if he or she “performs hours of service . . . for civic, charitable or humanitarian reasons, without promise, expectation or receipt of compensation” and offers the services “. . . freely and without pressure or coercion, direct or implied . . . “

This vague and general language leaves openings for interpretations to be made on the part of interns and subsequently their lawyers if one disgruntled intern decides they were taken advantage of during their time at an organization. While back pay may not break the bank, legal costs certainly do.

As unpaid internships continue to receive negative press, it may be more beneficial for a nonprofit to simply swallow the cost of paying an intern now, rather than face legal challenges down the road.

The final verdict on paying nonprofit interns

In most cases, if a nonprofit is able to afford paying an intern, it is my opinion that it is in the best interests of the organization and its interns to provide a stipend of some sort.

When factoring in the long-term benefits, the upfront costs of paying an intern seem less impactful to your organization. By paying your interns, you are providing tangible incentive for them to perform well, you are helping establish the value of these interns for their future careers (since building careers is what an internship is all about), and you are mitigating your risk of future legal troubles.

The reason I say “in most cases” is because some nonprofits truly don’t have the funding to pay an intern for whatever reason. If this is the case, I would advise those nonprofits to proceed with caution and try to offer some form of aid for their interns, such as metro cards for transportation, extra money for gas, or a parking pass.

What happens after you hire your interns?

Do you think nonprofits should pay interns? Why or why not? Has your experience with interns differed whether they were paid or not? Let me know in the comments section below.

Once you’ve hired your interns, it’s time to establish their responsibilities. It is up to you to make sure your interns are getting as much out of their experience as possible. In order to do right by your nonprofit interns, be sure to read our two guides on the subject here:

Looking for Nonprofit software? Check out Capterra's list of the best Nonprofit software solutions.

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About the Author

Nick Morpus

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Nick Morpus is a Content Writer for Capterra, a free resource that matches buyers and sellers of business software. He has a background in politics, economics, and journalism, which he dedicates his off-time to contributing his thoughts to other political sites. In his free-time he enjoys reading, drawing, photography, playing guitar, writing, and cooking.

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