Unemployment Trusts For Nonprofits Merge

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Two of the nation’s leading unemployment trusts for nonprofits have merged, creating one of the largest such firms in the country.

Joint Agencies Trust (JAT), based in California, and Northwest Agencies Trust (NAT), based in Washington, have formed a company called 501(c) Agencies Trust. The company will provide services to 1,500 nonprofit members in 44 states and Washington, D.C., but it remains unclear how the change will affect those members.

Nonprofits pay fees to such trusts instead of paying into their states’ unemployment insurance systems. The trusts then manage unemployment compensation claims for their members.

A 1972 amendment to the federal Unemployment Insurance Act gave nonprofits the option of not joining the state systems, but left them with the responsibility of reimbursing the states for unemployment claims that the states pay to the nonprofits’ former employees. For nonprofits, it was like driving without car insurance and hoping not to have an accident.

The fees that nonprofits pay to unemployment trusts are lower than what they had paid into their state systems. In return, the trusts invest those fees, investigate unemployment claims by former employees of member agencies, and manage reimbursement payments to the states. (See “Cutting the Cost of Ex-Employees,” July/August 2005.)

The members of the newly formed trust, which reports assets of $60 million, include the National Human Services Assembly, the Child Welfare League of America, the YMCA, the YWCA, and the Boys & Girls Clubs of America, along with many other smaller nonprofits.

“Combining resources is enabling us to do more for the nonprofit community,” Harriet Tunison, president of the new trust, said by e-mail.