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Why Just Futures Focuses on Nonprofit Retirement

According to the National Institute on Retirement Security (NIRS), the United States faces “a growing retirement crisis.” Many people in the United States “have no retirement savings and even among those who are saving, most are not saving enough to maintain their current standard of living in retirement,” their research shows.

Employer-sponsored retirement savings is one of the most accessible ways for workers to invest in the stock market and seek to build wealth. Roughly one-third of household wealth is held in the form of retirement assets, according to NIRS. As a result, benefit packages that include retirement contributions are a key way employers can help their workers build wealth. This is particularly true for nonprofit workers at organizations that—by definition—do not turn a profit, where there is less discretionary income to invest or save outside of covering expenses.

Just Futures’s mission is to help advance an economy rooted in principles of cooperation, non-extraction, and accessibility. As part of that goal, we conceived of a retirement platform as a point of intervention, designing policy and plans with the intention of building wealth for those who don’t have it – in both a prudent and values-centric way.

Nonprofit Workers Need a Solution

Currently, nonprofits employ over 12.5 million paid workers, making it the third largest workforce of any U.S. industry. With over $670 billion paid out in wages annually, the nonprofit workforce is also the third largest contributor to Social Security. The nonprofit workforce helps finance the federal government’s retirement savings pool for all workers and yet continues to struggle to receive federal recognition of their retirement needs.

The sector has never enjoyed the same regulatory favor around retirement planning as the private sector. Signed into law in 1935, the Social Security Act limited its coverage to workers in commerce and industry, excluding farmworkers, domestic workers, and workers in the nonprofit sector from this important measure of protection against poverty-stricken old age. It took almost 20 years for Congress to give nonprofit employers the choice of whether to enroll their employees (with no such choice provided to employees), and it wasn’t until 1984 that nonprofit workers were finally automatically enrolled in Social Security. Employer-based retirement plans were similarly limited. Nonprofit employees were permitted to have 403(b) plans beginning in 1958, but plans had limited investment opportunities and lacked employer contributions. In 1996, the IRS finally allowed nonprofits to offer 401(k)s to their employees.

Unequal treatment of nonprofit employers and employees continues today. The SECURE Act, passed by Congress in 2019, offers financial incentives such as tax credits to small business employers to offset costs associated with setting up a new retirement plan for employees, or adding in components like automatic enrollment. Notably, these tax credits are not extended to small nonprofit employers, resulting in no cash incentive for employers. Given that the vast majority of nonprofits (90%) have fewer than 100 employees (with over 50% having fewer than 10 employees), this has major impacts on the nonprofit industry. In this way, responsibility for retirement continues to shift from the collective to individual administrators, who must determine whether and how to provide benefits for their employees — without access to the same incentives and support as other employers.

This is wrong. And so, in 2022, longtime nonprofit workers and movement activists striving for an economy that works for everyone founded Just Futures. They decided to create the retirement platform they always wished existed for themselves and their organizations – one that made it easy for nonprofit administrators to offer benefits and that could be a vehicle to move their wages toward investments that are increasingly aligned with needs of people, communities, and our one planet.

If you don’t have retirement savings or your employer contracts with a different retirement plan administrator, we’d love to show you the advantages we at Just Futures can offer! You can reach us at info@justfutures.com. 

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This piece is based on our report, Reclaiming Retirement for All: Findings from the Just Futures Needs Assessment of the Nonprofit Sector.

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