Unpaid interns, good intentions, and how not to accidentally break federal labor law.

Four years ago, I received a phone call that changed my life.Okay—changed my life might be a stretch. But it definitely changed my winters.

“Hi Connie, do you still have empty bedrooms?”

The call came from a former staff member who knows I live alone and also knows my weakness for saying yes before fully thinking things through. He explained that Palm Springs Power Baseball was looking for host homes for interns in their Winter Baseball program. I’d just need to provide a safe place to live for five weeks. No meals. No money. No chauffeur service. Just a bed, Wi-Fi, and a roof.

“How bad could it be having a stranger live with me for a few weeks?” I thought.

Famous last words.

Adrian moved in a week later. The first few days were awkward—as they always are when you’re sharing a refrigerator with someone you met five minutes ago—but it worked out beautifully. Since then, I’ve hosted interns every winter and baseball players every summer. This past weekend, Nicholas moved in—a recent college graduate with a degree in Sports Management—and after reviewing the most important house rule (“The cat never goes outside. Ever.”), I found myself thinking, as I often do…

What does all of this have to do with nonprofits?

A lot, actually.

Interns are often seen as the magic solution when budgets are tight and workloads are heavy. But before anyone in nonprofit leadership gets too excited, let me pause for a very important disclaimer: I am not a lawyer. What follows is practical guidance based on IRS and Department of Labor standards—not legal advice. If you’re unsure, talk to an employment attorney or HR professional. Your future self will thank you.

Here’s the short version: most people must be paid for the work they do. Unpaid internships are allowed only in limited circumstances, and only when the arrangement primarily benefits the intern—not the organization.

The IRS leans heavily on guidance from the U.S. Department of Labor under the Fair Labor Standards Act (FLSA), which uses something called the Primary Beneficiary Test. In plain English, it asks a simple question: who benefits more from the relationship? If the organization is getting the bulk of the benefit, the intern should be paid. Full stop.

An unpaid internship generally passes muster only when it looks and feels like an educational experience. That means it resembles classroom learning more than a job, is tied to an academic program, has a clear start and end date, includes close supervision, and does not replace paid staff. There should be no promise—or expectation—of a job at the end, and everyone should clearly understand that the position is unpaid from the start.

Think: learning experience.Not: free labor.

Where nonprofits get into trouble is when interns quietly become staff substitutes. If your intern is filling gaps, working independently, handling routine operations, or producing significant value—fundraising, admin support, program delivery—you’ve crossed into “this should be a paid position” territory. If you catch yourself thinking, “Wow, this intern is really saving us money,” that’s your cue to stop and reassess.

Nonprofits can have unpaid volunteers, but interns are not automatically volunteers. Calling someone an “intern” does not magically exempt you from wage laws, even if the intern cheerfully agrees to work for free. Wage laws cannot be waived—by anyone.

So how do you do this right?

Back in 2013, Desert Best Friend’s Closet hired our first intern, Cliff. He was paid—but more importantly, I was determined that the relationship would be mutually beneficial. Cliff wasn’t just doing paperwork; he had access. He attended board meetings, donor visits, Chamber events, AFP gatherings, and staff interviews. He saw the wins and the losses. He learned the messy, complicated, wonderful reality of nonprofit leadership.

I also created “Research and Learn” projects—think homework assignments for the real world. From understanding our mission to analyzing the budget, Cliff was learning how nonprofits actually function. Eventually, we partnered with our local community college so students could receive academic credit. Later, I even started building intern stipends into grant proposals because, in our desert community, experience alone doesn’t pay the rent.

And here’s the thing: I learned just as much from them as they did from me. Their curiosity, fresh perspective, and energy made our organization stronger—especially during times when I was overwhelmed and, yes, losing sleep.

So nonprofit leader, if you need help but funds are tight, interns can be part of the solution—if you design the role thoughtfully, ethically, and legally. Done right, internships build capacity, strengthen your organization, and develop the next generation of nonprofit leaders. Done wrong…well, that’s the kind of thing that keeps people awake at night.

If you want help thinking through internship structures, paid vs. unpaid roles, or how to build meaningful learning experiences (without triggering an IRS headache), let’s talk. I offer a free 30-minute discovery call, and while I can’t promise instant sleep, I can help you lighten the load and move forward with confidence.

And if you’re interested, I’m also happy to share my “Research and Learn” projects—fully editable, MS Word format—just contact me. Maybe this small step will lead to a better night’s sleep.

PS: When the California Winter League wraps up, I’ll share an update on Nicholas. Stay tuned.

Sleep well, nonprofit leader.