Over the next few months, many nonprofit organizations will begin seeking summer interns. Well-managed internships provide great benefits for both the intern and the organization. Interns get a taste of the nonprofit world, and nonprofits not only get an additional worker, but can also spread their message about the organization’s mission.
Many organizations have unpaid internships, which by definition makes the interns volunteers. Some organizations pay their interns a “stipend.” Either arrangement is at the discretion of the nonprofit, and nonprofits tend to have more flexibility in this arena than for-profit companies.
However, be cautious if you’re trying to have it both ways. If you pay your interns a stipend, that compensation may cause the Department of Labor to classify the interns as employees. Employees must be paid at least minimum wage and may qualify for overtime. Interns who are volunteers do not need to be paid.
The Department of Labor has guidance to help employers properly classify interns. This guidance, “Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act,” enumerates seven criteria that help determine whether an intern should be classified as a volunteer or an employee. Most of these criteria are focused on which party is getting the greater benefit from the work. Generally, if the employer is getting more benefit, the intern should be paid, but each case is different.
According to the National Association of Colleges and Employers, about 40 percent of internships are paid—though this percentage is growing—and hourly compensation is in the $20/hour range. Organizations deciding whether to pay interns must tackle the legal ramifications as well as any ethical issues regarding work that benefits the organization’s financial position.
Familiarize yourself with state and federal laws regarding internships. Clear and consistent communication regarding status, start and stop dates, duties, benefits, and compensation should be in writing so there are no misunderstandings.