Executive Compensation Conversation and the Starvation of Smaller Nonprofits
Nonprofit executive compensation has been the hot topic on Twitter this week (at least among the nonprofit geeks like me). This time, the discussion started in response to the Boys & Girls Club CEO being paid nearly a $1 million last year and some legislation in Canada that would cap nonprofit executive pay at $250,000 per year (here and here). These types of compensation conversations almost always focus on the biggest organizations and the biggest salaries, a topic that is interesting but irrelevant for most people working in and leading nonprofits across the Unites States.
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The controversy over executive pay in the biggest organizations undermines and distracts from the equally important conversation about the continued starvation (for more) of the nonprofits on the other end of the spectrum. In my experience as a nonprofit staff member, board member, grantmaker and consultant, the problem of severe underinvestment in overhead, including staff and staff compensation, is a serious structural issue that reduces the sustainability and effectiveness of many organizations and the sector as a whole.
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Passion, idealism, and commitment attract people to social change work. The reality of working in many nonprofits is often soul-crushing, frustrating, and draining. In too many organizations, staff members are paid at rates that would enable them to access the services provided to clients, receive little to no professional development, are overworked, and do not have access to the tools necessary to do their jobs well (like technology, functional office equipment, administrative support, etc). In the average nonprofit with a budget around $500,000 per year, the executive director manages the staff, raises most of the money, works with the board, oversees most communications, may deliver programming, and tries to advance some larger strategic goals if some time is left over at the end of the day (and there rarely is). This job description has evolved because of underinvestment in infrastructure and capacity, not because this is the best leadership model for the sector.
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Too many in the nonprofit sector accept this starvation model as just the way things are. We need to change this attitude to make the sector more sustainable and effective. Without additional investment in organizational infrastructure and capacity, most small to mid-sized nonprofits will continue to piece together resources to inch their mission forward. While I mostly agree with Rosetta Thurman that CEOs of large nonprofits who want for-profit salaries should work for for-profit companies, those of us working at smaller, community-based nonprofits need to continue to advocate and make a stronger case for greater investments in the infrastructure and overhead necessary to support strong leadership, fair pay and benefits for staff, effective operations, and better organizational results.
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Every time the issue of excessive executive compensation comes up, those of us working in the “average” under-resourced nonprofit need to redirect the conversation to make the case for investing in infrastructure and leadership. We cannot continue to let the controversy about $1 million salaries filter down and define perceptions about community-based nonprofit organizations. Each time an organization reduces their investment in infrastructure in response to media criticism, funder pressure, or some other external force, we are continuing to perpetuate this vicious cycle that undermines effectiveness and mission impact. Instead, we need to step up and demonstrate why these investments actually result in a more effective use of donor dollars and greater mission impact.
Well said, Sarah. It is extraordinarily challenging to deliver quality programming and services when staff is stretched thin and feel undervalued. The tide is starting to turn and I appreciate your leadership on this issue.
Well said! In my opinion, part of the problem is that nonprofits do not correctly focus on outcomes. Of course, on the one hand the whole organization is about “fulfilling the mission,” and that is why they work for little pay, make do with so few resources, etc. On the other hand, they are not counting the true cost of starving the infrastructure and the staff. Organizations that understand that they are a business – in the business of meeting their mission to be sure – but that they are a business, are better able to make decisions that make the organization robust and sustainable.
Thanks for your comments, Terrell and Stacy.
Stacy, your point about organizations not counting (or understanding) the cost of starving infrastructure is right on. The cost of not having a good database is, over time, far more “expensive” for an organization than investing in the right system and then using it to help make better decisions, streamline activities, and hopefully save time. Same thing for staff – retaining good people over time and investing in them will cost an organization less than turnover. I know it is hard to get there, but we as a sector need to make this a bigger priority.
Excellent points, Sarah. In addition to the less than stellar pay for executive directors of smaller and mid-sized NPOs, I’m always floored by the high expectations and low pay that is advertised for other positions in smaller NPOs. So many in the sector expect entry level admin people to possess a four-year degree and exceptional skills and, in return, the candidate is offered pay in the $10-$12/hr range. It’s shameful to make those offers knowing that people are eager to work in the nonprofit sector and they will accept the horrible pay for their high quality skills. At what point will the workforce decide they can’t afford the nonprofit sector? As the cost of higher ed continues to soar, I think it won’t be long before people choose the for-profit sector.