Making the Case for Better Wages in the Non-Profit.

Non-Profits need to pay better wages, specifically to their female employees.

I know in the last month or so, the buzz has been around overpaid nonprofit leaders. I would argue, like so many, that these wages are very much needed and reflect the difficulty in leading large organizations. Further, I want to argue that we need to increase salaries even more.

Here’s why:

• According to the Bureau of Labor Statistics (BLS) in the United States, the median annual wage for employees in the nonprofit sector was $41,000 in 2020, compared to $53,000 for employees in the private sector [1].
• A survey conducted by the Nonprofit HR organization found that nonprofit organizations pay, on average, 24% less than their for-profit counterparts for similar positions [2].
• Another study conducted by Charity Navigator and GuideStar showed that non-profit CEOs earn, on average, significantly less than their counterparts in the corporate sector. In their analysis of CEO salaries, they found that the median base salary for non-profit CEOs was $123,462 compared to $1.2 million for CEOs in S&P 500 companies [3].
• Finally, the 2019 Nonprofit Employment Practices Survey by Nonprofit HR revealed that 42% of non-profits reported having insufficient funds to offer competitive salaries, which can contribute to lower overall salary levels within the sector [4].

These numbers demonstrate that the non-profit sector as a whole has issues offering competitive salaries. I want to argue that the sector owes it to itself to begin offering better wages to its employees. Better wages would:

1. Help Attract and Retain Talent: Offering competitive salaries helps non-profits attract and retain talented individuals. By offering fair compensation, non-profits can compete with for-profit organizations and other sectors for skilled professionals. This strengthens the organization’s ability to fulfill its mission effectively.
2. Improve Employee Morale and Engagement: Adequate compensation demonstrates that an organization values and recognizes the contributions of its employees. When employees feel fairly compensated, it boosts morale, job satisfaction, and overall engagement. This can lead to increased productivity, loyalty, and a positive work culture.
3. Enhance Performance: Fair compensation can motivate employees to perform at their best. When employees are financially secure and feel valued, they are more likely to be motivated, committed, and invested in the success of the organization. This can lead to higher levels of productivity and improved outcomes.
4. Reduce Turnover and Recruitment Costs: Investing in better compensation can reduce employee turnover. High turnover rates can be costly in terms of recruitment, onboarding, and training expenses. By offering competitive salaries, non-profits can retain skilled staff members, reducing turnover costs and maintaining institutional knowledge.
5. Help Compete for Diverse Talent: Non-profit organizations benefit from having diverse perspectives and experiences among their employees. Offering better compensation can help attract a diverse pool of candidates, enabling the organization to tap into a wider range of skills, backgrounds, and perspectives and improving their Diversity, Equity and Inclusion (DEI)). This promotes innovation and effectiveness in achieving the organization’s mission.

There is a darker undercurrent that I want to highlight. Over 70% of non-profit employees are women. The sector as a whole survives on lower paid jobs and many employees no longer even make a living wage. Improving wages for women specifically, in the non-profit sector can have several overall benefits:

Economic empowerment: Higher wages enable women to achieve greater economic independence and security. This empowerment can lead to improved living conditions, financial stability, and increased opportunities for personal and professional growth.

Reduce the gender pay gap: By addressing wage disparities and ensuring fair compensation, the non-profit sector can contribute to reducing the gender pay gap. This promotes equity and fairness, recognizing the value of women’s contributions and expertise.

Improve work-life balance: Adequate wages can alleviate financial stress, allowing women to better balance work and personal responsibilities. This can positively impact their well-being, mental health, and overall quality of life.

Enhance an organization’s reputation: Non-profit organizations that prioritize fair wages and gender equality are more likely to be seen as socially responsible and attractive to donors, supporters, and partners who value gender equity. This can positively impact the organization’s reputation and relationships.

Create more social justice and equality: Ensuring fair wages aligns with the principles of social justice and gender equality. It reflects a commitment to equal opportunities, fairness, and respect for the rights of women as valued members of the workforce.

Generate a ripple effect on communities: When women are economically empowered through fair wages, they can invest in themselves, their families, and their communities. This can contribute to poverty reduction, improved education, healthcare access, and overall community development.

By improving wages in the non-profit sector, specifically for women, organizations can play a crucial role in advancing gender equality, empowering women, and creating a more just and equitable society for all. More importantly, the non-profit sector begins to take its first steps towards acknowledging that it is part of the issue, creating a cycle of poverty again and again.

My name is Carmen and I have worked in and with this sector for over 15 years as a Management Consultant and dedicated advisor. I am currently Co-Founder and President at Pharo Non-Profit, where we build tools and resources to scale impact in this sector.

If you found value in this blog, we would love to hear from you. Please feel free to contact hello@pharononprofit.com to give us feedback, ask questions or leave your comments.
You can also access more content on this and other issues facing nonprofits by joining our community at: https://nonprofitportal.com/join-n

Sources Sources: [1] Bureau of Labor Statistics — Occupational Employment and Wages, May 2020 [2] Nonprofit HR — 2019 Nonprofit Employment Practices Survey [3] Chronicle of Philanthropy — CEO Pay at America’s Biggest Charities [4]Nonprofit HR — 2019 Nonprofit Employment Practices Survey