Determining Compensation for Not for Profit Employees

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How much should you pay your Not for Profit employees and leaders? You get what you pay for, says the old idiom, but does this ring true? Strong leadership is the lifeblood of an NFP but channelling an undue amount of money into salary and overhead drains the budget and presents a potential PR liability. Getting it right is a matter of careful consideration, creativity, and transparency. 

Not for Profit Salary Dilemma 

Any discussion of not for profit pay must start by addressing the elephant in the room, the competing objectives of properly paying for top talent and channeling as much money as possible toward the mission at hand. 

An organization who offers too little in the way of compensation risks damaging recruitment and retention efforts. NFP’s compete for talent in a free market and, while many candidates are attracted to the prospect of doing some good in the world, they still have bills to pay. 

The situation is especially acute at the top: running an NFP requires a highly competent and motivated person and if that person drastically increases fundraising and furthers the objective of the organization, have they not provided a net benefit? 

On the other hand, organizations are wary of being labelled as frivolous. Six figure salaries are hardly the kind of mental image that motivates charitable giving. Situations where leaders are considered over-compensated can also have a negative effect on the morale of lower earning staff and volunteers. 

“We speak with donors who really care about salaries all the time,” says Greg Thompson, director of research at Charity Intelligence. “Some folks just think it’s wrong, it’s immoral even, for someone working at a charity to get paid very much.”1

Thompson believes that every situation is unique, and that engaging in conversations with stakeholders is a good way to express rationale for payment structures. 

NFP Consultant Joan Garry believes that competitive leadership salaries are often money well spent. 

“Strong leadership is not just important for a non-profit – it’s absolutely critical,” she says. “This person is the voice and face of your organization. The strategist. The visionary. The lead fundraiser. The advocate. A leader in your sector. A healthy non-profit with outstanding leadership will be able to help more people in a more effective and bigger way for a much longer time. They achieve their missions faster.”2

Expected Salaries at Not for Profits

There is no magic formula for setting compensation levels at Not for Profits. Not surprisingly expected salaries in the sector differ by experience, education, job description, and geographic location. According to Salary Explorer, Foundational Directors and Fundraising Managers command the highest level of compensation, while Social Workers and Homeless Shelter Workers occupy the other end of the spectrum.3

Transparency and Process for Setting Not for Profit Compensation Levels

It’s advised that the Board of Directors be involved in, or at least be made aware of, salary decisions and that these decisions be reviewed on a regular basis. In fact, publishing this data for public access can be seen as an act of transparency and looked upon favorably by various stakeholders. 

The decision can be informed in part by examining salaries offered by comparable organizations. Browsing job listings, researching compensation assessment sites, or simply asking organizations for this information can yield useful information. An experienced NFP recruiter, such as Goldbeck Recruiting, can be of invaluable assistance in this regard.

The decision must be made with a holistic view of your organization’s priority in mind. What can the budget afford? How will a position contribute to the overall furthering of your objectives? Will it pend a performance review? What types of people are you hoping to attract to the position? Age and other factors will influence their priorities.

Compensation Entails More Than Just Salary

While salary is an important factor in any compensation package, it’s not the only one. Benefits, professional development opportunities, flexibility, and time off are all important and should be highlighted. Which benefits matter most to your employees? Soliciting employee feedback on the matter is a good way to gain valuable insight. 

Then, of course, there’s the potential for the ‘altruistic discount’. Some candidates will be enticed by the opportunity to contribute to a good cause. This is a recruiting advantage that should be leveraged delicately, as it’s counterproductive to be seen as taking advantage of an individual’s goodwill. 

“With salaries that are often lower than in other sectors, a non-profit’s values can be the trump card in both recruitment and retention,” writes Doug Toft for MissionBox. “Look for new hires whose personal values align with your organization’s and communicate shared values on an everyday basis to maximize staff retention.”4

Garry advises that those trying to hire an Executive Director can bolster an offer simply by showing the right attitude. 

“What you can do is make the ED feel like a million bucks,” she says. “At the end of the day, it’s the combination of a reasonable wage and solid value and appreciation that will fire up an ED to deliver a five-star performance.”2

Worth the Effort

Without massive salary budgets and stock options, not for profits can find themselves facing a considerable recruiting challenge. But with proper consideration and effort, good, capable leadership can be obtained. Failure to make this a priority will be to the detriment of the organization and their goals. 

Cited Sources
1 Claire Brownell January 4, 2019. “Be Wary of Charities That Pay Their Staff Too Much-or Too Little.”, October 18, 2019.
2 “Is It OK For Nonprofit Leaders to Make Big Salaries?” Joan Garry Nonprofit Leadership, July 13, 2016.
3 “Fundraising and Non Profit Average Salaries in Canada 2021.” The Complete Guide. Accessed April 9, 2021.
4 Toft, Doug, MissionBox staff, Madeleine Monson-Rosen, MissionBox DoubleTake, Kathryn Engelhardt-Cronk, Leigh McKinney, Kendra Shaw, and Alexis Logsdon. “Employee Compensation: Best Practices for Nonprofits.” MissionBox, March 18, 2021.