A Nonprofit Call to Action: On the Occasion of GuideStar’s 2014 Compensation Study

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Another year, another compensation report on the top salaries of people working in nonprofits. GuideStar does an enormous service, of course, in compiling all the statistics for this every year. The data will show where your salaries stand relative to similar organizations of similar size in similar geographies, and such data should definitely be available to nonprofits. It is a starting point. But something is missing—no fault of the report’s authors, but reflective of nonprofits as a sector and the issues we choose to address. 

As in compensation studies of years past, the authors have in their executive summary documented the gender gap in nonprofit CEO positions. Not only do women get paid less than men for their work on like organizations, but their presence in leadership gets more and more sparse the higher the annual budget of the organization (and the top salary) gets. The report shows that the gender salary gap ranged from 11 percent for CEOs at organizations with budgets of $250 thousand to close to 23 percent at organizations with budgets between $25 million and $50 million.

Geography was, as usual, critical to salary levels. For the ninth consecutive year, CEOs in Washington, D.C., brought in the highest salaries among 20 metropolitan statistical areas. Portland, Oregon CEOs were paid the least, although when cost of living is figured in, Oakland CEOs had the lowest purchasing power.

What this report does not and cannot cover due to the nature of current data collected in 990s is the question of leader-to-lowest-paid-worker ratios. Salary equity in nonprofits is something that even the most damning of newspaper exposés of nonprofit CEO compensation rarely address. Clearly, the wealth divide is one of the most high tension issues of the decade; that makes it potentially moveable, but the nonprofit sector, though it may participate in discussions of salary ratios for the for-profit sector, has not generally taken the issue up as its own.

Should this sector more thoughtfully declare itself as supportive of a reasonable ratio between highest- and lowest-paid workers? And shouldn’t it establish a measurable standard of practice that will make the sector beacons for the issue? Or will we just wait around to be dragged kicking and screaming into an issue that we should, by rights, lead on—by example, as well as by word? There are pushes abroad to have charities be transparent about ratios. In public policy, the exploration of salary ratios as a benchmark is also catching on. The Dodd-Frank financial reform law includes a requirement for public companies to disclose their CEO-to-worker pay ratios, but today, nearly three years after the law passed, the Securities and Exchange commission still hasn’t put the rule in place.

The ratio question is creeping up on the world and nonprofits have taken no leadership in it. Sometimes they’ve even engaged in secrecy rather than transparency about their own pay scales. They are on record in some locations as asking for special dispensation in the paying of minimum wage.

Let’s see some leadership here, Independent Sector and National Council of Nonprofits! It will accrue, in the end, to building our public image as a sector.

  • M. Warner

    You’ve touched a nerve with this article on nonprofit compensation. I’ve been searching for a job in the nonprofit sector for a couple of years now. One of my pet peeves is the lack of salary information provided on job postings. What’s the big secret? I’ve determined that super low pay IS the big secret and that’s why salary info isn’t posted. Many of the day-to-day positions in the nonprofit world are at between $25,000 and $35,000 per year. And the expectation is that no matter how much experience you have in the nonprofit world (I’m at around 2 decades of experience), you will have to work for this low wage because that’s all the organization can afford. While I hear a lot about for-profits expecting employees to come in fully trained for their positions (for-profits aren’t willing to pay to train their own employees), the nonprofit community is even worse along these lines. Nonprofits appear to want people who are EXACTLY trained for the positions they are walking into, being more unwilling to train than for-profits. And the low wage still stands. My husband worked for one of the largest nonprofits in Minnesota, a social work position for which he was expected to have a Bachelor’s degree, but was paid so low a wage that he was eligible for the homeless program he was working on. He made less than some of his clients. And this was not uncommon among the other employees in the office. Shouldn’t nonprofits have an ethical mandate to NOT put their employees into poverty, particularly if they’re working to pull people out of poverty?

  • David Nolan

    Competition should drive down the average CEO salary.

  • CJ

    Such a true statement. My career has always been in nonprofits. I started out as a social worker and I, too, struggled as much as my clients. It was beyond frustrating. I didn’t go into social work to get rich, but I certainly expected to be paid a liveable wage. In my situation, the board set my salary, but I set them for the rest of the staff. Most of the staff made more than I did (by my choice), but the board seemed to have this mentality that because we were nonprofit we couldn’t pay – so I’d get little piddly raises of 2 or 3% on my $12/hour salary. It was demoralizing and demotivating. Fortunately, I moved on to another nonprofit that understands you need to be competitive – if you expect excellence, you need to understand you as an agency also need to step up to the plate. I can see myself retiring from here, and work HARD every day to earn every penny.