Non-profits are familiar with the concept of economies of scale in their day-to-day operations. When possible, combining with partner organizations to share a goal or assume a common project decreases costs, and magnifies impact. The same principle applies to retirement plans.
A 403(b) pooled employer plan (PEP) allows multiple organizations to combine their retirement plan assets, creating opportunities for reduced costs and access to institutional-quality services. For smaller non-profits, this means being able to offer benefits that would otherwise only be available to much larger organizations.
Economies of scale also simplify administration. Instead of each organization managing audits, compliance, and vendor contracts independently, these functions are centralized. This reduces duplication of effort and creates a more consistent experience for staff and boards alike.
For boards making decisions about stewardship, the ability to achieve economies of scale through a pooled plan represents an important opportunity. It ensures that resources are used efficiently while providing employees with access to robust benefits.
In many ways, pooled employer plans reflect the collaborative spirit of the non-profit sector. By joining together, organizations achieve outcomes that would be difficult or impossible on their own. This alignment between structure and values makes economies of scale a compelling reason for non-profits to consider a PEP.
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