how-to-find-salaries-of-nonprofit-employees

How To Find the Salaries of Nonprofit Employees

Danica

Managing and working for a nonprofit can be rewarding in a lot of nonmaterial ways, which is why volunteers get involved. However, to tackle the mission of your organization, your team also needs salaried employees. If you are just launching a small organization, you may wonder how nonprofits pay their employees.

Look no further! In this guide, we will share information about how to manage payroll, find salary information, and report compensation to the IRS. We hope you find this information helpful!

Let’s go!

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Do Nonprofit Employees Get Paid? 

The short answer is: yes, of course! Paying your nonprofit employees involves pretty much the same steps as it does with for-profit businesses. For one thing, you will have to follow a host of legal requirements on both the state and federal levels. The federal minimum wage rate is currently $7.25 per hour, but states have their own wage laws, and you will have to pay your employees (at least) whichever minimum is higher. 

However, it is important to note that offering a competitive salary is the best way to attract the best and brightest to your organization. It will also go a long way in keeping employees content and combating employee turnover, which will ultimately save your nonprofit money because you will not have to spend time advertising available jobs, interviewing applicants, or training new hires. These deficits, of course, are mostly material; the loss of knowledge and interruption of camaraderie that come with losing certain individuals depict only a few of the nonmaterial consequences that accompany high employee turnover.

how-to-find-salaries-of-nonprofit-employees-do-nonprofit-employees-get-paidWho doesn't love getting paid? Sadie sure does!

One of the unique issues facing any nonprofit employer is the fact that they must walk a tightrope between hiring the best candidates with competitive salaries and keeping their operating costs low. After all, you want most of your revenue to go back into your mission. This is why it is important that every nonprofit does its due diligence in finding the most appropriate salaries for its employees. 

Pro Tip: Managing payroll and payroll taxes can be an involved process, so hire a human resources director or a payroll specialist to handle these tasks. If your nonprofit cannot afford to hire a full-time person for this position, you can hire an independent contractor or work with a payroll specialist vendor, such as ADP or Paylocity. 

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What Factors Affect Nonprofit Salaries?

So nonprofit employees should be paid, but how much do they make? The short answer is that it depends on a variety of factors.

The salary you offer a new recruit hinges on: 

  • The role they are filling. The salary for a nonprofit program manager will be different from the salary for an executive director, fundraising manager, or volunteer coordinator. The pay should fit the job. 

  • The location of your nonprofit organization. The salary for any position will be higher in a large city, such as New York City or Los Angeles. 

  • The size of the organization. Larger organizations will be able to offer higher compensation than small charities because they tend to have a larger pool of funds at their disposal. 

  • The qualifications of the candidate. Some positions will require more experience and/or higher education. These positions will naturally pay more than those that are entry-level or only require a high school diploma.

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Where Can I Find Information on Nonprofit Salaries?

Even with the above factors in mind, it is not always easy to figure out what to offer a new individual. This is where your state’s nonprofit association can step in. Many of these organizations gather data and compile them into surveys, which you can use as a salary example. You may be able to access the survey’s results or executive summary on the association’s website. You can find your state association by visiting the National Association of Nonprofits

Another way to find nonprofit salaries is to get on a hiring site, such as LinkedIn or Indeed, and check out the current job listings for similar organizations and positions in your area. Or, you can simply Google something like, "salary for program manager nonprofit [name of state]," and check the results. 

Finally, if you have the budget for it, you can do a research deep dive with the following paid publications: the GuideStar Nonprofit Salary Report or the Nonprofit Salary Survey by the Economic Research Institute. 

how-to-find-salaries-of-nonprofit-employees-can-i-pay-myself

Can I Pay Myself in a Nonprofit Organization?

A common misconception is that nonprofit founders pour their heart and labor into their organizations without a thought for financial reward. While it is true that most nonprofit executive directors do what they do out of passion, it is not feasible for them to pay their bills for little or no compensation. 

It can be difficult at first, especially if you are heading a small charity, to feel that you deserve a decent salary. However, there are actually several benefits to paying yourself in a nonprofit organization, including: 

  • A solid nonprofit salary lets you focus entirely on your organization as your career. You will not need to run your nonprofit as a part-time gig if you are receiving full-time benefits. 

  • Receiving pay that matches your workload reduces the chances of burnout.

  • Having salaried employees lends legitimacy to a nonprofit. The foundations, corporations, and government bodies that award grants to pay nonprofit employees are more likely to take a nonprofit seriously if it is not run entirely by volunteers. 

All that being said, a nonprofit CEO does not really pay themself. Normally, the board determines and approves the executive salary to avoid the appearance of undue influence or partiality. 

how-to-find-salaries-of-nonprofit-employees-reporting-nonprofit-salaries

Reporting Nonprofit Salaries

Because many nonprofits have tax-exempt status, they are under continual scrutiny from the public, the IRS, their volunteers, and their donors. Therefore, when calculating salaries for your organization’s employees, especially your directors, you want to be careful. You are required to send an annual report to the IRS via Form 990 and share the salaries of your highest paid employees

how-to-find-salaries-of-nonprofit-employees-reporting-nonprofit-salariesMatt is doing some research on which salaries his nonprofit needs to report.

Your report on these salaries should involve not only the income itself, but your employees’ entire compensation package. This includes any medical benefits, paid time off, and bonuses. The IRS will look at these packages to ensure that they fit its (admittedly vague) concept of "reasonable compensation." There is no hard number that will set off alarms, but if the IRS feels that a salary is not reasonable (even due to low compensation), you can be penalized, which may result in you losing your nonprofit status.

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Final Thoughts

Working for a nonprofit is an amazing way to build skills, such as multitasking. For many individuals, it also pays off in inspiration and social consciousness. You can easily get the best and the brightest in any number of roles if your nonprofit offers fair compensation. If you are wondering how much to pay yourself or your employees, take some time to research what is being offered in the nonprofit world via hiring sites, state nonprofit associations, and nonprofit publications. With a stellar team, there is no limit to what your organization can accomplish!

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FAQ

đź’ˇAre nonprofit salaries public knowledge?

While not always as easy to find as those of public figures, most nonprofit executive salaries are public. A nonprofit’s financials, including its executive salaries, are submitted to the IRS annually through Form 990. This information is public record. Find out more. 

🔑 What are a few reputable websites for finding nonprofit salaries?

The best place to look for this information is on the website of your state’s nonprofit association. Most of these associations conduct and compile annual salary surveys. You can also check employment websites to find posted nonprofit jobs in your area. Find out more. 

đź“ť How do I find nonprofit financials?

You can get this information from GuideStar, which is a nonprofit that gathers financial information on other nonprofits. You can also visit the specific organization’s website and look for a page about Form 990 or annual financial reporting. Find out more.  

Organization & HR
Danica
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