Over the last few years, many Teen Challenge organizations have been moving away from paid internship positions and going to non-paid internships that are combined with an in-house study component like TCMI or Emerging Leaders. Historically, the Wage & Hour Division (WHD) has designated a paid internship in the same category of a non-exempt employee. WHD basically says that if someone is being paid to perform a service, then in the eyes of the law they’re employees. However, WHD has always recognized an exception where the intern volunteers without expectation of compensation when it is for a non-profit organization.
When a nonprofit organization accepts a volunteer to do an uncompensated internship, there are a couple of important guidelines that should be followed.
Unpaid internships can legally last for up to one year. Most unpaid internships in Teen Challenge last only about 4 months. After one year, if the intern is kept on, they have to be hired as staff. The exception would be if the internship is part of an in-house education program that the volunteer has enrolled in. If you’re not paying a stipend during the first year of program, you definitely want to start paying one the second year.
Interns need to be designated volunteers who provide a service for the ministry in exchange for room and board and training. The person volunteering for an uncompensated internship position needs to sign a written agreement with the nonprofit organization so that both parties understand that the internship is an uncompensated one.
Because an internship position is considered a training position, Interns need to be getting as much cross-training as can be done for them by the non-profit organization they have volunteered to intern at.
Interns enrolled in an in-house education program like TCMI or Emerging Leaders can receive a monthly stipend as part of the education program they’re enrolled in. The student does have to report this on their taxes. When I looked into all the options for reporting such income, I found several different answers depending on which state the center was located in, amount of stipend, etc. My advice is to consult with a good tax accountant for your area.