The Baltimore Community Foundation

The Baltimore Community Foundation’s 401(k) plan has a 100% participation rate among its 26 active employees, and that is largely the result of automated plan design and a generous employer contribution.

The 401(k) plan has had 100% participation since 2018 after starting automatic enrollment in 2017. The foundation’s high employer contribution has played a big role in employees being willing to contribute, Human Resources Manager Kimberly O’Haro says of the philanthropic organization, which aims to improve the quality of life in the Baltimore region.

Asked what strategic role the 401(k) plan plays for the organization, Michael Campbell, the foundation’s chief financial officer and vice president of administration says, “It’s a nonprofit, so attracting and retaining employees for us goes beyond the salary we offer, to the benefits, and the 401(k) plan is a key factor in our overall compensation.”

The Baltimore Community Foundation provides a match of 100% on the first 3% of salary deferral and matches 50% of the next 3%. It also makes a 5% nonelective contribution for employees with more than one year of service at the foundation. “Our organization’s ability to maintain what I consider a very generous match has been absolutely critical to attracting employees,” Campbell says. “Why not be in a plan that essentially pays you almost 10% to participate? It’s like a salary increase.”

In 2018, the plan committee had increased the maximum match available, to 4.5% from 3%. “It was a combination of looking at our budget and what we can afford, and also thinking through, ‘We have a dollar-for-dollar match up to 3%, which is good, but could we go beyond that?’” O’Haro says. Adds Campbell, “As an employer, not being able to pay ‘market’ [for-profit employer] wages, and not having bonus pay for our employees, we have to make it work in other ways, and this is the lever that we use.”

O’Haro meets one-on-one with all new employees and explains the basics of how the plan works. “It seems like even our early-career employees understand the value of the rich contribution we make to the retirement plan,” she says. “And we have no waiting period for match eligibility.”

Asked how he defines success for the 401(k) plan, Campbell says he does so partly through tangible data such as the participation rate and offering appropriate investment options. “We are in the small-plan range, and it’s also an issue of, are we doing justice to our employees? And the answer is: Yes.”

In 2017, the plan reduced the number of loans a participant can have outstanding to one from two and educated participants on the risks of taking a loan. The changes had an impact: The percentage of participants with a loan outstanding declined to 7.8% in 2022 from 10.8% in 2021.

“It seems so easy to people to pull that money out of their account,” O’Haro says. “So we have calculators that can show our participants the (account balance) implications of taking that money out. We want to show them, ‘This is what happens to your long-term retirement savings.’”

—Judy Ward