News for Donor Advisors

A recent policy change announced by the South Dakota Department of Corrections is having a major impact on the bottom lines of some nonprofits.

For many years, South Dakota State Prison inmates have participated in a program to help with community service projects. Places like Habitat for Humanity of Greater Sioux Falls, Girl Scouts, and the Furniture Mission, have relied upon inmate labor to carry out their missions.

Under the new Department of Corrections policy, inmates working for non-profit organizations must now be classified as work release employees rather than participants in the community service program. This change increases compensation requirements from $1.25 per hour to at least the minimum wage of $10.80.

For some non-profits, this change results in a staffing cost increase of more than 1,200%. For example, one local nonprofit employed 3-4 full-time trustees at an annual expense of $9,360. Under the new guidelines, the cost to hire the same trustees will be $112,320.

Unintended consequences of a change designed to help the reentry process

The policy change is certainly a win for inmates and for the broader community. The increased earnings will position those reentering society with additional resources to secure housing, transportation, and other necessities needed to hit the ground running. But for nonprofits who are already struggling to compete with the commercial and retail sectors to attract and retain employees, the abrupt change has left them scrambling for ways to find additional funding to continue providing vital services.

If you want to learn more about this emerging and complex issue, and how philanthropy can help, our team is here as a resource.