Quick! What do you think when you see the words “nonprofit?”
Idealism? Humanitarianism? Visionaries who make the world a better place? Yes!
Also, lack of business savvy (that whole “not for profit” thing), lack of budget, and lower pay . . . not so “yay.” And I’d respectfully submit, that those last two things tend to go together.
Here’s the thing. Nonprofits have to fundraise much harder in order to serve mission in the absence of profit—which I can’t stress enough, shouldn’t be confused with revenue, or poor pay.
You may not set up your nonprofit to mint money, but you do need to have a healthy business model that enables you to do more than just keep the lights on. You need to have a financial house that enables you to fulfill your mission, expand your services, and meet your goals.
Certainly, you need to have a business or fundraising model that’s financially healthy and robust enough that you can pay your staff well.Because if you don’t, if you skimp on salary or keep it down to the bare minimum, two things happen:
1) Your Staff Will Leave
First, you generally ensure that your staff will leave the second they get a better offer.
Think about it. It’s the rare nonprofit that doesn’t have staffers wearing multiple hats to begin with. Add to that poor pay? It’s a good way to set up your staff to burn out or get poached by others, including better funded nonprofits, especially in competitive markets like Washington D.C. (aka, nonprofit central). Because good work gets noticed fast in any industry. But worse, if you pay poorly, you get left with the people who can’t get a better offer. Enter the staffing turnover and dysfunction that comes with “you get what you pay for.”
2) You’ll Attract The Wrong People
Second, poor pay will attract the well-off who can afford to live on low wages. And the problem with that is equally obvious—you risk ending up with a self-selecting group of people who may have the connections to fundraise well, but might have to work much harder to see why their approach or worldview is incomprehensible to the people they seek to serve. My favorite example is of the lovely but slightly removed co-workers who didn’t understand that the new mom in the office couldn’t legally hire a nanny, who would make more than she did.
Really? Yes, really.
Nonprofits who do not pay their staff what they’re worth, or at the very least do not offer competitive compensation, will always worry about losing talent. And make no mistake about it, talent will cost you.
It’s one thing if your non-profit is literally getting off the ground. It’s entirely another if you’ve been around for a while and are seeing things stagnate or simply not grow in ways you want.
Take a good look at your pay structure. Have you appropriately budgeted for fundraising staff? For communications staff? For executive management? There is a reason those positions demand, and offer a good compensation package, or at least, staunch perks to supplement a slightly less generous financial offer (teleworking, flexible hours, and creative freedom come to mind).
So ask yourself—for better or for worse—are you getting what you pay for?
I’ve been ranting about this for some time (see http://techcafeteria.com/blog/2009/08/05/compensating-for-chaos/). As a CIO, I look at this through a technology lens, and I see two major, recurring themes that aren’t spelled out in your post. One is the danger that people will stay at the job, but resent the situation. I think there are a lot of people at nonprofits who are caught up in the work and mission enough to justify staying at low wages, but they bring a little poison to work with them because they do feel undervalued and abused. That can have a detrimental effect on morale. More of a problem: turnover, and the common case where critical positions are empty more often than filled, along with the significant, multiple investments in onboarding. In IT, regularly changing the key technology person can result in huge instability for the systems, as each new hire will have their own approach. So what we see a lot at nonprofits are either long-term IT staff who are either uncommitted to the work or resentful of their status, and, in most cases, dangerously out of touch with the trends; or a revolving door that keeps systems from stabilizing and maturing. Big, common NPO problems.nnnWhat really annoys me? Nonprofits that base their salary structure strictly on what other nonprofits pay, as opposed to factoring that in along with the commercial market rates. If you want to know the average size of a house in your neighborhood, you don’t exclude the 80% that are taller than your own house and then say you have a neighborhood average.nnnMy case is that nonprofits don’t have to pay as much as for-profits. Personally, I consider the opportunity to do meaningful work a portion of my compensation. But it’s not 50% of what I’d be making elsewhere, or 30%, or 20%. If it’s more than 5%, it’s shaky, more than 10%, abusive and self-defeating. As much as I love serving good missions, I also love feeding my family and paying for my kid’s education.
Peter – thank you so much for that comment! “I also love feeding my family…” Whodathunkit? 🙂 nnnAnd yes, there are probably several things not addressed in this post. Word limit…so please add your input. It’s a good conversation to have. nnnBest,nnnSohini.
We have this discussion going on in one of my LinkedIn groups all about how making a good wage and helping others are not mutually exclusive (even though many nonprofit leaders would like to think their work has more meaning because they’re being underpaid.) Great post!