Nonprofit Salaries: What Should I Earn?
A common myth about nonprofit organizations is that salaries are low and can’t compare with the corporate world. Depending on your expectations, nonprofit salaries may be more competitive than you think.
Nonprofit organizations are in a tough spot, in that they receive funding in order to meet a mission and there is an implicit expectation that as much of that funding as possible should go directly to programs supporting the mission. Historically, much of the total dollars spent by an organization on compensation has been allocated to administrative overhead, which can send the wrong message to funders. However, more and more, funders and nonprofits alike recognize that an organization’s effectiveness and ability to meet its mission is dependent upon the quality of its staff, and understand that they can no longer rely on highly qualified people who are willing to work for less than market-rate salaries just for the “feel good” satisfaction. Nonprofit organizations are highly professional workplaces and in order to attract and retain outstanding talent, they need to be competitive with other job opportunities. Therefore, nonprofit salaries are becoming more and more competitive and organizations are paying much more attention to the market rate for compensation. That being said, nonprofits do operate in a resource-constrained environment and need to be very conscientious about the compensation that they offer, both from a budget perspective and from an internal equity perspective.
What does this mean for you, the jobseeker? Salary negotiations are complicated and involve many variables. Some will be individual criteria, such as salary requirements and estimated market value, and some will be organizational criteria, such as budget restrictions, internal equity, and benefits packages. It is important that you understand your own criteria deeply and that you also take into consideration the situation of your prospective employer. This article discusses some guidelines to consider when contemplating compensation negotiations with a nonprofit employer.
Compensation vs. Salary
Salary is just one piece of how employees are compensated. While salary is the actual amount of money an employee earns (financial compensation), total compensation is the full picture of how an organization demonstrates the value of its employees, including benefits and perks. When entering into any kind of compensation negotiations, it is important to consider your needs around both financial and non-financial compensation.
When determining your personal compensation requirements, consider what is important to you. Do you value 100% employer-paid medical benefits? Do you require a flexible work schedule that allows you to work at home? While compensation packages vary across nonprofit organizations, many nonprofits offer some or all of the following types of benefits as part of their comprehensive compensation packages:
- Medical, dental, and life insurance benefits (% employer-paid will vary)
- Retirement plan, such as a 401k or 403b investment plan (employer match policies will vary)
- Flexible schedules
- Generous time off policies
- Internal growth opportunities
- Business-casual work environments
- Optional unpaid vacation
Prioritize the compensation factors that are most important to you and let that guide you when considering your salary requirements.
Determining Salary Requirements and Expectations
The first step in determining your salary requirements is to figure out your personal bottom line. Create a budget of your expenses—such as housing, food, transportation, child care, entertainment, etc.—and determine what you need to earn each month.
Then, do your homework! Research benchmarks for similar positions at similar organizations. Remember that salary is determined by many factors, including an individual’s education level, years of experience, and job function. For example, positions in nonprofit finance, operations, and management typically pay $50-75K for mid-to-senior roles, and $75-150K for executive roles.
Organizational factors, such as organizational budget or location, also play a role. According to the most recent salary survey published by The Nonprofit Times, jobs in the Mid-Atlantic region offer the highest salaries, then the West, then the Central states. In general, organizations with larger budgets ($10 million and higher) tend to pay more than organizations with budgets under $10 million.
To dig deeper into specific nonprofit salary benchmarks, we recommend the following resources:
Guidestar: A free searchable database of over 1.5 million nonprofit organizations, including Form 990 tax return data that documents salary information for the five highest-paid positions at specific organizations. Guidestar also offers a fee-based nonprofit compensation report and salary search tool.
The Nonprofit Times 2005 Salary Survey: Annual special report from major sector publication The Nonprofit Times. Provides benchmarks primarily for senior-to-executive management positions across budget size and geographic location.
Professionals for Nonprofits 2006 Salary Survey - New York and Professionals for Nonprofits 2006 Salary Survey - Washington D.C.: These annual surveys of New York City and Washington D.C. nonprofits provide salary ranges in management, finance, fundraising, marketing, programs, and IT across organizations of varying operating budgets.
When developing your compensation requirements, remember that you need to understand both your market value, as described above, and the internal variables that impact an organization’s ability to pay (budget, location, internal equity, funding cutbacks, etc.). It is perfectly possible that you determine your market value to be $60,000, for example, but the organization you really want to work with is only able to pay you $50,000. You need to consider how you prioritize compensation, opportunity, work environment, reputation, etc.; many people have accepted positions below their market rate because of the amazing opportunities provided.
Increasingly, nonprofits are considering varied types of financial compensation plans, including signing bonuses and performance bonuses. Consider your comfort level with the various financial compensation options. For example, suggesting a performance-based bonus plan to a prospective employer will allow you to demonstrate your confidence in meeting goals, while allowing the organization to minimize risk and you to potentially maximize earnings.
Discussing Compensation with a Potential Employer
When discussing compensation with a potential employer, remember that nonprofit employers value honesty and communication and will anticipate that you will be ready to be open about your salary requirements and other needs. If appropriate, explain the reasons behind your requirements but remember to always use discretion when sharing any type of personal information. It is important for both sides to have a clear understanding of all the factors involved, and in addition to coming prepared to share your compensations needs, be sure that you have all the information you need from the organization. If the salary range has not been openly stated, request this information directly. Inquire about the other aspects of compensation. Ask how salary is determined by the organization and where this position falls in the range of salaries.
Most nonprofits also value a combination of humility and self-advocacy; they want you to be confident in the value that you can add to their organization, without overselling, appearing too focused on compensation and status, or overvaluing past experience or education. For example, while many nonprofit employers value an MBA, they don’t want someone who thinks that because they have an MBA, they deserve a $30,000 increase over their previous salary.
During all these discussions, stress any areas where you can be flexible, and share your willingness to explore creative solutions. Remember that nonprofits often don’t have much flexibility in their finances, but may be able to demonstrate flexibility in other areas. The organization may be willing to supplient financial compensation with other types of compensation, such as the ability to work from home one day a week or offering unpaid leave for extended vacations.
In general, there is not a lot of room for lengthy salary negotiations with a nonprofit employer. Nonprofits pick a range based on the factors described earlier and generally do not have the ability to offer more. With this in mind, don’t attempt to “sell” yourself as being worth more than what they can offer, and never lie about what you are willing to accept to get through to the next stage of the hiring process.
Finally, no matter what, do not agree to a salary that will make you unhappy in the short or long-term. Find out the organization’s policy on raises and bonuses in advance, and never accept a lower salary because you are expecting a salary adjustment down the road. If the organization cannot offer you what you need, and you cannot adjust your salary requirements, it is sometimes best to walk away from the opportunity. However, if you are able to be flexible with your salary requirements and consider other aspects of compensation, you may end up in a rewarding and personally fulfilling position.
This article was written by Commongood Careers and is published under a Creative Commons Attribution-NonCommerical-NoDerivs 2.5 License.
For more information about nonprofit and socially entrepreneurial careers, visit Commongood Careers at http://www.commongoodcareers.org