How Much Should My Nonprofit’s Employees Make?
Common wisdom has it that no one works at a nonprofit to make money. While nonprofit salaries are often lower than those of comparable jobs at for-profit businesses, you can still make a living wage working for a worthy cause.
Volunteers are often essential, but much of the operation of a nonprofit depends on paid staff. So, how does a nonprofit pay its employees? The answer is: by carefully allocating program expenses so that the organization can balance hiring talented, passionate people with using its funds to carry out its mission.
Here is what we will cover in this guide to salaries in the nonprofit sector:
- What Affects Nonprofit Employee Salary?
- National Nonprofit Salary Data
- Other Nonprofit Salary Considerations
- Final Thoughts
No time to read this article now? Download it for later.
What Affects Nonprofit Employee Salary?
Obviously, nonprofit salaries vary, sometimes substantially, from organization to organization. These are the factors that typically decide a nonprofit employee’s compensation.
Simply put, in areas where the cost of living is higher, compensation is also higher. This mostly applies to large urban areas, such as New York City, San Francisco, and Los Angeles. Unless employees are remote, they need to be able to afford to live in the area where they work. However, the transition to more remote and hybrid workers as part of the pandemic may ultimately make location less of a factor when it comes to pay.
In general, larger nonprofit organizations can afford to pay their employees more. They bring in large sums of money, such as grants, to pay their nonprofit employees.
In fact, the IRS classifies nonprofits into six categories based on the total worth of their assets:
Less than $100,000
$100,000 to $500,000
$500,000 to $1 million
$1 million to $10 million
$10 million to $50 million
$50 million or more
Small organizations with less than $100,000 in assets might not have any paid employees at all, operating entirely through volunteers. On the other hand, a nonprofit with $30 million in assets may be able to pay the CEO $250,000 a year or more.
Anthony is taking note of what can affect nonprofit employee salaries!
Sometimes, this factor goes hand in hand with size, as certain types of nonprofits require larger organizational structures. For example, nonprofit healthcare organizations, such as hospitals, not only require many employees, but they also bring in a great deal of fundraising money, allowing them to pay more. Credit unions are not completely tax-exempt, but they are still nonprofits, and they also pay some of the highest executive salaries.
Just as with for-profit businesses, nonprofits base a large part of a job’s salary on the duties that it entails. Employees who manage or oversee other staff members receive more compensation, as do those with executive job titles. Employees who deal with finance, technology, data science, and medicine also typically earn more because they require more specialized knowledge and training.
As you gain more experience in a given field or role, you generally receive higher pay. Someone who has worked in their field for 20 years is going to earn more than someone who only has five years of experience.
Education may also fall under this category. A person with a master’s degree usually earns more than someone with a bachelor’s degree who, in turn, earns more than someone with a high school diploma. Usually, though, job duties and years of experience are more relevant factors than education.
Pro Tip: If you are the founder of a new organization, you may be wondering, "Can I pay myself in a nonprofit organization?" The answer is yes! If you can make a living from your nonprofit work, you can devote all of your time to it, increasing the chances that you achieve your mission.
National Nonprofit Salary Data
Nonprofit salaries vary widely across the country. Mississippi, Florida, and North Carolina tend to have the lowest average nonprofit salaries, and Massachusetts, Washington, and New York have the highest. Overall, according to Payscale, the average base salary for a nonprofit employee is $58,000.
However, that average does not provide much information when it comes to income for individual roles within an organization. What follows are some estimated ranges for a few typical nonprofit job titles.
Overall, the average salary for a nonprofit CEO is about $181,000. Often, this is the highest-paid position because it requires experienced leadership.
On top of being the overall leader of the organization, the CEO also oversees the organization’s operations. They may even serve as the spokesperson to the public, promoting the organization and its mission.
In a small nonprofit, the executive director usually fills the same role as a CEO. They may also be the founder of the nonprofit. Since the organization is smaller, an executive director’s salary is also smaller — usually between $40,000 and $130,000 with a median of $69,000.
The actual programs of a nonprofit fall to individual program managers. This role typically reports directly to the CEO or executive director. The average salary for a program manager of a nonprofit is $55,000 with a range of $40,000 to $79,000.
A nonprofit’s marketing manager may handle everything from public relations to event planning depending on the size of the organization. Above all, the goal of marketing management is to raise public awareness of the nonprofit and its mission. A marketing manager can expect to earn between $46,000 and $102,000 with a median of $69,000.
The fundraising manager works hand in hand with the marketing manager to find new sponsors and donors and to coordinate fundraising events. However, they are also tasked with finding other funding, such as grants. Interestingly, a fundraising manager typically has the same job duties no matter the size of the organization. They stand to make $44,000 to $104,000 a year, with the average fundraising manager salary being $68,000.
Corinne is finding all these salary numbers super helpful!
Most nonprofits are at least partially staffed by volunteers to keep expenses down. The organization’s volunteer coordinator manages the recruitment, training, and scheduling of these volunteers. They also make sure that events are properly staffed with volunteers. This volunteer or program coordinator role usually comes with a lower salary that averages about $46,000.
Pro Tip: If you are wondering how to find salaries of nonprofit employees, your best bet for getting the most specific and accurate information is to purchase an official report. The Association Trends’ National Nonprofit Compensation Report and Guidestar’s Nonprofit Compensation Report are two examples of yearly publications that give the latest salary information. You can also check the website for your state’s nonprofit association.
Other Nonprofit Salary Considerations
In addition to the information we provided above, you also want to take the following factors into account as you are creating your nonprofit’s compensation policy.
Salaries are a large part of a nonprofit’s program expenses, as it cannot run without a staff. The Better Business Bureau’s Charity Accountability Standards state that nonprofits should spend at least 65% of their operating budget on program expenses. About 75% to 90% of this 65% should go toward paying employees.
Executive Salary Cap
There is no cap on nonprofit executive compensation. However, nonprofits must list the names and salaries for executives and other high-paid employees who make over $100,000 a year on their yearly 990s. IRS Form 990 is the tax return for nonprofit organizations.
Of course, salary is not the only way nonprofit employees receive compensation. They may also get:
Health, vision, and dental insurance
Short- and long-term disability
Paid time off
Retirement and pension funds
Accounting for these expenses is an important part of any nonprofit’s budget planning.
Typically, a nonprofit’s board of directors determines the salaries of executives. The board often forms a committee once a year to review executive compensation. This committee looks at executive salaries from similar organizations to come up with fair figures.
Tristan is feeling informed about making nonprofit salary decisions!
The executives themselves should not be part of this decision-making process. This helps keep the process fair.
Pro Tip: Your human resources (HR) department — or HR professional if you do not have a whole team — can choose the salaries of non-executive employees. Since the stakes are lower for these employees, they do not need to undergo the same rigorous selection process. However, HR should still use salary data from similar organizations for guidance to ensure fair compensation.
Employee salaries make up a large part of a nonprofit organization’s expenses. While the usual goal of a nonprofit is to spend as much as possible on achieving its mission, employees are the ones who run the programs to make this mission happen. They deserve to be compensated fairly, and, for the most part, they are. Though a career in the nonprofit sector may not be as lucrative as it would be in the for-profit world, an individual can still earn a decent salary while following their passion!
Enjoyed the article? Download it to keep or share with others!
💡What nonprofit employee makes the most?
Nonprofit CEOs or executive directors usually have the highest salaries. Find out more.
🔑 What factors affect how much nonprofit employees make?
Nonprofit salaries usually depend on the size and location of the organization as well as the education and experience of the employee. Find out more.
📝 Is there a maximum salary that a nonprofit executive can receive?
Although there is no salary cap for a nonprofit executive, all salaries over $100,000 must be reported to the IRS in a publicly available document called Form 990. Find out more.