How Well Are You Paying Your Nonprofit Staff?

How well (or poorly) are you paying your staff members? Could they make more money working at the local Target or fast-food restaurant? If so, you’re not paying them enough!

A History of Underpaid Nonprofit Staff

I’ll never forget working at my first fundraising job at a domestic violence shelter, more than twenty years ago. The staff — mostly social workers — were all women. None of them lived on their own because they couldn’t afford it. They either lived with a roommate, with their parents, or their spouse.

Think about that for a moment… adults living with roommates or parents because it was utterly impossible to make ends meet. Financially, the staff weren’t in much better positions than the clients they served.

As a sector, we’ve got to do better.

Use Capital Campaign Goals to Increase Pay

Recent conversations with two separate development directors got me thinking about nonprofit staff salaries again. Both were heading into capital campaigns for independent schools and raising funds for teacher recruitment and retention funds, among other things.

One DOD said they were paying their teachers less than 50 percent of the average comparable salaries. They needed to get their teacher salaries up to stay competitive. The other DOD said they were paying their teachers in the top 75 percent of comparable teacher salaries and want to do even better. Both are compelling cases for support.

I’d love to see all nonprofits aim to pay their staff competitive (or even above average) salaries.

Turnover is Detrimental to Nonprofits

Turnover costs are usually higher than expected and you may end up paying the replacement a higher salary than the person who left. The organization may need to pay a finder’s fee of up to 30 percent of the first year’s salary. And it’s likely that you’ll be without a key staff member for six months or more. That’s in addition to wasted time, learning curve and training costs, etc. of a new staff member.

When a staff member quits, it is detrimental in more ways than financial. Remaining staff members and clients suffer due to work disruption and uncertainty. The unmet workload usually falls to already overworked staff members or it goes undone.

Higher salaries would reduce staff turnover and attrition from the field.

Making the Case to Stingy Boards

Some boards operate to save money at all costs and pay staff accordingly. Some believe that staff members should be there for the mission and will work for poverty wages. That might be true initially, but it won’t last long.

Although nonprofit staff members do mission-based work because they care, it doesn’t mean they don’t also want to get compensated fairly. They have families to raise and lives to lead. If they can’t make a reasonable living, they are going to leave for the private sector.

That’s the case you need to make to your board.

Recruit and Retain Top-Tier Talent with Better Pay

Nonprofit organizations should be aiming to recruit and retain the most talented team they can afford. This will provide donors with the peace of mind that the programs and services they are supporting are run by the best and brightest people available.

In addition, staff turnover costs nonprofit organizations millions of dollars each year.

As you consider budgeting and fundraising goals this year, make a twofold plan to:

1. Increase staff pay.
2. Be competitive (or even generous) with staff salaries to recruit and retain top talent.

How does your organization’s salaries and pay scale stack up against others in your community? Let me know in the comments below.