How Big Should Your Non-Profit HR Team Be?

Your best programme manager just quit. Again. 

But when you pitch proper HR investment to your board, they point to your overhead ratio and kill the conversation: "We're a charity, not a corporation. Where's the mission money going?"

Organisations that crack the HR equation don't just retain talent, they multiply their mission impact whilst actually reducing per-programme costs. 

Here's the forensic breakdown of how to build HR capacity that serves your mission instead of draining your budget. ⬇️

Why Every HR Formula You've Seen Gets Australian NFPs Wrong

Corporate Australia deals with employees. You deal with employees and volunteers and clients who often become advocates and board members who think they understand operations and funding bodies with contradictory requirements and media scrutiny that can destroy you overnight.

Consider large food relief organisations. They manage substantial staff numbers whilst coordinating thousands of volunteers across hundreds of locations. Each volunteer requires police checks, food safety training, manual handling certification, and cultural competency workshops. Their "HR to employee ratio" appears reasonable until you factor in volunteer coordination complexity — the real workload often equals managing double their traditional employee count.

A compliance avalanche

Unlike their corporate cousins, Australian NFPs navigate a regulatory minefield that would terrify most HR professionals:

• ACNC Governance Standards demand you prove you're actually charitable whilst operating professionally. 
• Fair Work Act compliance across multiple awards (because your disability support workers, admin staff, and programme coordinators all fall under different instruments).
• National Standards for Volunteer Involvement that transform volunteer management from "getting help" to "complex stakeholder engagement." 
• Plus sector-specific nightmares like NDIS Practice Standards or Aged Care Quality Standards.

Here's the catch-22 destroying good organisations: boards demand low overheads, but mission delivery requires exceptional people, and exceptional people need proper support.

The organisations that solve this paradox reframe HR investment as "mission infrastructure." Progressive boards track metrics showing strategic HR investment generates significantly more programme impact per dollar than bare-bones approaches. 🙌

Key insight: Every dollar invested in proper HR support multiplies across your entire organisation through better recruitment, retention, compliance, and volunteer coordination.

HR to Employee Ratios: The Foundation Metrics

Before diving into specific recommendations, let's establish how to properly calculate your HR team size. The HR to employee ratio measures the number of HR professionals per 100 employees, expressed as a percentage.

The Formula: HR to Employee Ratio = (Number of HR FTEs ÷ Total Employee FTEs) × 100

Critical considerations for accurate calculation:

✅ Use Full-Time Equivalents (FTEs): Part-time employee working 20 hours = 0.5 FTE

✅ Include all HR functions: Recruitment, employee relations, compliance, volunteer coordination

✅ Exclude certain roles: Payroll-only positions, dedicated L&D roles

✅ Count hybrid roles appropriately: Volunteer coordinators often straddle HR and programme delivery

Industry Benchmarks: Where Do You Stand?

Research consistently shows that smaller organisations require higher HR ratios due to baseline staffing needs. Here's what the data reveals:

• Small organisations (1-250 employees): Average of 3.4 HR staff per 100 employees
• Medium organisations (251-1,000 employees): Approximately 1.22 HR staff per 100 employees 
• Large organisations (1,000+ employees): Around 1.03 HR staff per 100 employees

However, these figures reflect general business benchmarks. Not-for-profit organisations face additional complexities that typically push their requirements above these baseline figures.

But NFPs face the "Multiplier Effect" — additional capacity requirements including:

The NFP Multiplier Effect: Why Charities Need More HR Support

Several factors unique to the not-for-profit sector create what we call the "NFP multiplier effect": additional HR capacity requirements beyond standard business ratios.

Factor 1: Volunteer management complexity

The National Standards for Volunteer Involvement outline eight comprehensive standards that require dedicated attention:

1. Leadership and governance integration
2. Volunteer participation championing
3. Meaningful role design
4. Equitable recruitment processes
5. Ongoing support and development
6. Safety and wellbeing protection
7. Recognition programmes
8. Continuous improvement systems

Managing volunteers requires specialized skills in motivation, flexible scheduling, recognition programmes, and often, managing individuals with varying skill levels and commitment levels.

Volunteer coordinator to volunteer ratios vary significantly:

• High-touch programmes (mentoring, crisis support): 1:15-25 volunteers
• Event-based volunteering: 1:50-75 volunteers
• Ongoing service delivery: 1:30-50 volunteers

Factor 2: Enhanced compliance requirements

Different NFP subsectors face varying compliance burdens that directly impact HR capacity needs:

• NDIS Providers: Must maintain registration with the NDIS Quality and Safeguards Commission, requiring worker screening clearances and compliance with NDIS Practice Standards
• Aged care organisations: Face evolving worker screening requirements, with new aged care worker screening checks aligning with NDIS requirements expected from mid-2026
• Multi-programme charities: Often operate across several regulatory frameworks simultaneously, multiplying compliance complexity

Factor 3: Funding and grant management

Many NFPs operate on project-based funding cycles, creating unique HR challenges:

• Cyclical hiring and workforce planning
• Grant-specific employment conditions
• Reporting requirements tied to staffing metrics
• Transition management between funding periods

How Many HR People Australian NFPs Actually Need

Rather than applying a one-size-fits-all ratio, use this strategic framework to determine your organisation's specific HR needs.

Stage 1: Organisational Assessment (1-25 Employees)

Baseline HR Capacity: 0.8-1.2 FTE

The conventional wisdom says 0.5 FTE is sufficient. That's catastrophically wrong for NFPs. Why? Because even tiny organisations need:

• Volunteer coordination (average 50 volunteers per 25 employees in this stage)
• Multiple compliance streams (Fair Work, charity registration, sector-specific requirements)
• Grant reporting that includes detailed staffing metrics
• Crisis management capability (because small NFPs are inherently fragile)

Most successful small NFPs use a 0.7 FTE dedicated HR coordinator plus 0.3-0.5 FTE fractional expertise (usually a senior HR consultant on retainer for complex issues). At this stage, many organisations rely on:

• Hybrid roles: An operations manager or CEO handling basic HR functions
• Outsourced support: Fractional HR services for specialized needs like recruitment or compliance
• Template-based policies: Using sector-specific resources rather than custom development

Essential functions to establish:

• Employment contracts complying with relevant awards
• Volunteer management framework aligned with National Standards
• Fair Work Act record-keeping and wage compliance
• Crisis response protocols
• Simple performance management processes

Stage 2: Growth Phase (26-50 Employees)

Baseline HR Capacity: 1.8-2.4 FTE

This is where most NFPs either flourish or implode. At this stage you're too big for informal systems but too small for corporate-style HR departments.

The structure that works:

• 1.0 FTE HR Manager (strategic focus, compliance leadership)
• 0.8 FTE HR/Operations Coordinator (day-to-day operations)
• 0.3-0.6 FTE Volunteer Programme coordination (often combined with community engagement)

⚠️ Critical success factor: The HR Manager needs protected time for strategic work or you'll stay trapped in crisis management.

Key developments:

• Formal recruitment and onboarding processes
• Employee development pathways
• Volunteer training and recognition systems
• Employee engagement measurement tools
• Performance management aligned with mission delivery

Stage 3: Established Operations (51-200 Employees)

Baseline HR Capacity: 3.2-5.1 FTE (1.6-2.55% ratio)

Here's where NFP HR becomes genuinely complex. You need specialists, but not the same specialists as corporate organisations.

The architecture that works:

• 1.0 FTE Head of People & Culture (strategy, leadership development, culture)
• 1.0 FTE HR Business Partner (employee relations, performance management, recruitment)
• 1.0 FTE Volunteer Services Manager (volunteer recruitment, training, recognition, compliance)
• 0.5-1.0 FTE HR Operations/Systems Coordinator (administration, HRIS, reporting)
• 0.7-1.1 FTE Compliance/Training Specialist (sector-specific compliance, mandatory training)

🎯 Volunteer management is a full profession at this scale. Organisations trying to bolt it onto existing HR roles consistently underperform.

Advanced considerations:

• Technology integration: HRIS systems, volunteer management platforms
• Strategic workforce planning: Succession planning, skills gap analysis
• Advanced compliance management: Sector-specific requirements, audit preparation
• Culture and engagement programmes: Employee surveys, development pathways

Stage 4: Large NFP Operations (200+ Employees)

Baseline HR Capacity: 4.8-8.2 FTE (2.4-4.1% ratio)

Large NFPs face complexity that rivals multinational corporations but with nonprofit constraints and accountability pressures.

The sophisticated structure:

• 1.0 FTE Executive Director, People & Culture (strategic leadership, board reporting)
• 2.0 FTE HR Business Partners (embedded with major programmes/regions)
• 1.0 FTE Talent Acquisition Manager (recruitment, employer branding)
• 1.0 FTE Learning & Development Manager (capability building, compliance training)
• 1.0 FTE Volunteer Services Manager (volunteer strategy, coordination, recognition)
• 1.0 FTE People Operations Manager (systems, analytics, reporting)
• 0.8-2.2 FTE HR Coordinators/Specialists (administration, specific compliance areas)

At this scale, your HR function must integrate seamlessly with programme delivery, funding management, and stakeholder relations. It's not support, it's core infrastructure.

How to Calculate Your Volunteer Management Needs

Every NFP leader underestimates volunteer management complexity until they experience it firsthand. Here's the forensic breakdown of what works. 👇

The National Standards Reality Check

The refreshed National Standards for Volunteer Involvement are the benchmark against which your organisation will be judged by funders, regulators, and volunteers themselves. Implementing them properly requires significant capacity:

Standard 1 (Leadership Integration): Requires governance policy development, board education, risk framework integration – approximately 0.1 FTE ongoing capacity.

Standard 4 (Equitable Recruitment): Demands inclusive recruitment processes, accessibility planning, diversity monitoring – adds 25-40% to basic recruitment time.

Standard 6 (Safety and Wellbeing): Mandates comprehensive safety planning, mental health support, incident management – requiring dedicated safety expertise or extensive training.

Volunteer Complexity Multipliers

Simple coordination (event volunteers, basic administrative support):

• Ratio: 1 coordinator per 80-120 volunteers
• Capacity: 0.4 FTE per 50 volunteers

Standard programming (ongoing service delivery, regular training):

• Ratio: 1 coordinator per 45-70 volunteers
• Capacity: 0.7 FTE per 50 volunteers

Complex intervention (crisis support, mentoring, advocacy):

• Ratio: 1 coordinator per 25-40 volunteers
• Capacity: 1.1 FTE per 50 volunteers

High-risk programmes (child protection, mental health, disability support):

• Ratio: 1 coordinator per 15-30 volunteers
• Capacity: 1.4 FTE per 50 volunteers

The Outsourcing Alternative: When and How to Leverage External HR Support

Outsourcing isn't about saving money, it's about accessing expertise you can't afford to employ directly. Here's when it makes strategic sense.

Ideal Outsourcing Scenarios

Scenario 1: The Growing Organisation Gap (80-120 employees)

Can't justify $140,000+ senior HR director but need strategic capability beyond coordination level.

Solution: Fractional senior practitioners 1-2 days weekly for strategic planning, board reporting, complex employee relations. 

Cost: ~$50,000 annually vs. $140,000+ full-time.

Scenario 2: Crisis Expertise

Sexual harassment investigations, workplace injuries, unfair dismissal cases — specialist expertise needed rarely but critically.

Solution: Qualified investigators on retainer rather than developing in-house capability.

Scenario 3: Technology Projects

HRIS selection, volunteer platform implementation, payroll transitions — project-based activities requiring specialist knowledge.

Hybrid Models: Maximising Value

Most Australian NFPs can't afford full HR departments but desperately need more than basic coordination. The smart money's on hybrid approaches that mix permanent capability with targeted expertise:

Foundation model (30-80 employees):

• Full-time HR coordinator ($65,000-$75,000) handling daily operations, compliance tracking, basic recruitment
• Fractional HR manager (0.4 FTE, ~$45,000) for performance management, policy development, complex employee relations
• Specialist consultants on retainer for investigations, executive recruitment, major restructures

Partnership model (80-150 employees):

• In-house HR manager focusing on culture, employee development, volunteer coordination
• Outsourced payroll administration, benefits management, and compliance reporting to specialist providers
• Partnership agreements with employment lawyers, workplace investigators, and executive search firms

How to Make the Business Case for HR Investment

Your board cares about two things: maximising mission impact and minimising overhead percentages. Here's how to make HR investment speak their language. ⬇️

Cost-Benefit Analysis Framework

What you're actually spending:

Quantifiable benefits:

• Cut recruitment time in half: From 8 weeks to 4 weeks average = saving 4 weeks of lost productivity per hire
• Slash volunteer coordinator burnout: Proper systems mean volunteers stay longer
• Sleep better about compliance: Professional HR spots problems before Fair Work inspectors do (one penalty avoided pays for 6 months of HR support)
• Keep your programme managers: Exit interviews consistently show people leave managers, not organisations — fix the management support, fix the retention

Building Your Business Case

Framework for board presentation:

1. Current state analysis: Document existing HR challenges and their impact
2. Proposed solution: Detail recommended HR capacity and structure
3. Implementation timeline: Phased approach with measurable milestones
4. Budget requirements: Clear cost breakdown with funding sources
5. Success metrics: Specific KPIs for measuring ROI

Compelling arguments for NFP boards:

• "This multiplies our programme impact": Well-supported programme managers deliver more client outcomes because they're not drowning in administrative chaos
• "This protects everything we've built": One serious compliance breach could jeopardise funding relationships that took years to establish
• "This turns volunteers into advocates": Properly managed volunteers become our best fundraisers and community ambassadors
• "This makes good people want to stay": High-performing programme staff choose organisations where they feel supported and can grow professionally

The bottom line

Investing in your people isn't overhead, it's the foundation that enables everything else you do. 

Every life your organisation touches, every community problem you solve, every systemic change you drive happens because you have the right people, properly supported, working toward shared goals.

The Australian not-for-profit sector faces unprecedented challenges and opportunities. Climate change, social inequality, demographic shifts, and technological disruption all require mission-driven organisations that can attract, develop, and retain exceptional people. 

Your HR function is your strategic enabler for greater impact.

Tired of losing your best people to better-supported organisations? Subscribe HR understands the brutal reality of Australian NFPs: you need corporate-level HR systems on charity budgets. 

➡️ With budget-friendly pricing designed for not-for-profits and tools for performance management that align with mission-driven cultures, see how Subscribe-HR helps NFPs do the HR basics well so you can focus on strategy. Request a demo to see Subscribe-HR's not-for-profit solutions. Subscribe-HR for Not-for-Profit Organisations.