All individuals paid to work for your project are assumed to be employees unless proven that they can be classified as Independent Contractors (ICs).
Independent Contractors (ICs) are commonly hired to do discrete, highly-specialized, project-based work such as web design, consulting, event planning, and other services. Hiring is highly regulated by the IRS. Each IC must be evaluated to ensure proper employment classification. If SGF/your project hires an IC who should be an employee, we could both be responsible for paying back taxes, fines, and penalties. We work hard to avoid this! For detailed information around how SGF will evaluate a potential IC, please visit the Project Handbook, starting on page 37.
A contract is required for all ICs that you’ll be paying over $600 in a calendar year. If you would like to hire an IC or Consultant to work for your project, please complete the following steps:
Step 1: Review the Independent Contractor Requirements in the State where the work will be conducted. Usually this is the state where the contractor is located. Each state has its own rules for the criteria that must be met before you can hire someone as an IC. Review the guidelines (blue button to the right) in the applicable state to make sure it seems like a fit for the work and worker you want to hire. If they cannot be hired as an IC, the most common alternative is to hire them instead as an employee on payroll.
Please reference the individual state requirements to the right.
Step 2: Review your budget and available funds. SGF can only sign off on contracts if you have funding available for the entire contract. Please check your project’s fund balance in Blackbaud. If you don’t quite have enough funds on hand, but are expecting additional funds to come in later, consider starting with a shorter scope. We can always amend or extend the contract later as funds become available.
Step 3: Identify the person you want to work with and the scope of the work.
Step 4: Collect the IC’s W9 Form and proof that they have an established business. All ICs must show proof of having an established business which can include (only): a business license (or equivalent document showing their business is registered in their city/location) or a business entity (such as an LLC with a separate EIN).
Note: If your IC does not have a business license or use an EIN, Social Good Fund will be unable to hire them as an IC. The individual can come on board as an employee (if funds are available) or you can find an alternate IC to complete the work.
Step 5: Fill out the Contract Initiation Form (or click top right purple button). This form will walk you through the process of determining whether or not the person (or company) you want to hire qualifies as an independent contractor, and your answers will also help SGF document that we have correctly classified this worker, in the event of an audit.
If it looks like the person you want to hire can be an IC, the form will also allow you to enter in all the key information we need to create a contract for them. You do not need to fill out the Word version of the contract template since we can generate the contract based on your form responses.
We prefer to use our template, but if your IC has a template they strongly prefer we use or if they have already provided you with a draft agreement, you can still use this form (there will be a place to upload the agreement). If at any point you decide you want to hire the person as an employee, please visit the Hiring Employees Page for more information and to begin that process.
Step 6: If Approved, SGF will create a contract and send it for signature. Our team will reach out to you via email if we have questions about your Contract Initiation Form. After you submit the form, our team will review your responses and email you within 2-3 business days if we have any questions or need other information. Once we have determined that we can safely hire this worker as an IC and all the information looks good and correct, we will generate a contract and send it out to you, our internal signer, and the contractor for signature. How quickly the agreement is executed is dependent upon the signers. Our team will set auto reminders to help keep things moving.
Step 7: Once the agreement is signed, your IC can begin work! When they are ready to submit an invoice to be paid, they should submit the invoice to you and you can submit to SGF for payment via the Invoice Payment Request Form. The Accounts Team processes invoices within 10 business days of receipt via the form.