How to Establish Nonprofit Salary Levels - dummies

How to Establish Nonprofit Salary Levels

By Stan Hutton, Frances Phillips

Deciding on a fair salary for your nonprofit employees isn’t easy. Compensation levels in nonprofits range from hardly anything to six-figure salaries at large-budget organizations. (Keep in mind, however, that large nonprofits represent only a small percentage of active nonprofits.)

Consider factors that affect salary

Although exceptions always exist, the following factors may determine salary levels:

  • Geographic location: Salary levels differ from place to place because of the cost of living. If your nonprofit is in a major metropolitan area, expect to pay more to attract qualified staff than if you’re located in a rural area.

  • Experience and education: Someone with ten years of experience can command higher compensation than someone just beginning his career. Education levels also affect salary, as does having specialized knowledge or skills.

  • Job duties and responsibilities: Employees who direct programs and supervise others typically earn more than employees who have fewer responsibilities.

  • Nonprofit type: Compensation levels vary from one nonprofit to the next. Organizations providing health services, for example, typically have higher salary levels than arts organizations.

  • Union membership: Labor unions set standards for salaries and benefits in many fields, from classical musicians to nurses and educators.

  • Organizational culture: This category, which is more difficult to define, is connected to the organization’s traditions and values. For instance, nonprofits with boards of directors filled with business and corporate members often offer higher salary levels than organizations with boards that don’t have the corporate perspective.

Find out salaries of comparable positions

A salary survey, which you can conduct by phone or mail, is a good way to assess the current salary levels in your area and for your nonprofit type. Telephone surveys probably should be done from board president to board president because most people are reluctant to reveal their own salaries. Mail surveys can be constructed so respondents remain anonymous.

The simplest method of finding salaries of comparable positions is to look at other job listings. Not all ads give a salary level, but those ads that do can give you a general idea of what others are paying for similar work.

Some nonprofit management organizations conduct annual or biannual surveys of salary levels in the areas in which they work. More often than not, access to the surveys requires payment, but it’s probably a good investment because these surveys tend to be the most complete and up to date.

A good place to inquire about salary surveys is through your state association of nonprofits (see the National Council of Nonprofits website) or Opportunity Knocks. Local community foundations also may be a good resource for salary data in your geographic area and budget size organization.

Using a search firm can be helpful, especially if the position requires a national search. Be prepared to pay a hefty fee, however. Fees are often based on a percentage of the first year’s salary.