Friday, August 10, 2012 - 8:25am
posted by
Angela Francis
,
Senior Associate
Nonprofit Finance Fund

Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.

We often talk about nonprofit executive compensation in skeptical terms: how much is too much? While no one supports wasteful public spending or abuse of power, the cases that grab headlines and provoke legislation are actually far from the norm. At Nonprofit Finance Fund (NFF), what we see far more often is staff turnover due to burnout and low pay. We routinely work with nonprofits that are struggling to determine if it’s financially possible to make a much-needed new hire, even on a part-time or contractor basis. This week’s installment of Research Friday will examine a range of new data from the field about our sector’s human resources—often, our most powerful but undervalued form of capital.


First up: The Chronicle of Philanthropy’s recent survey  of more than 900 young nonprofit professionals. With help from the Nonprofit Leadership Alliance and the Young Nonprofit Professionals Network (YNPN), The Chronicle found that many of the sector’s young workers “can’t afford to stay in their positions” because their salaries (often starting out in the $25 to $35,000 range) are no match for their student debt. Over time, low pay has real consequences for the sector in terms of talent. Case in point, YNPN’s 2011 survey of young nonprofit workers found that “commitment to remaining in a nonprofit job weakened as employees got older.” When asked to indicate the reason for leaving, over 90% of respondents cited burnout, although low salary and wages (82%), lack of career advancement (69%), and job related stress (69%) were also major contributors.


A certain amount of turnover is natural and to be expected. Life happens. Things change. But there are real program and financial dangers inherent to “churn” –i.e., spending precious time and resources searching for, interviewing, hiring, and training new candidates in the face of cyclical employee turnover. Simply put, well-trained staffers produce better mission outcomes; a new staff member will never be as effective as one who’s been in the job for a year. While their salaries may grow over time, there are countless efficiencies that can result from retention, not least of which is decreasing the administrative and financial burdens of employee attrition.

So why does churn seem so common to our sector? The answer lies, in part, in the general economic outlook for nonprofits: NFF’s 2012 State of the Sector survey showed that demand for services is markedly up, while the funding to meet these needs has not kept pace. As my colleagues at NFF recently blogged, “There is the well-known cultural expectation that nonprofit workers contribute their ‘sweat equity’ toward the organization’s mission.” In the charitable sector, we all understand the need to do more with less. But when a social worker’s caseload increases past her reasonable limits or when a domestic violence counselor must constantly work longer hours to prevent clients from being turned away, burnout is looming and churn is not far behind.

The incentive for achieving mission success only works for so long, especially as the economy forces nonprofits to become increasingly creative in the ways that they budget for human resources. Amid limited signs of recovery, NFF’s survey of 4,600 organizations nationwide showed that in 2011:

  • Nearly 1 in 4 organizations (23%) had to reduce staff 
  • 1 in 5 nonprofits (21%) reduced or froze salaries
  • While 12% said they increased employee benefits, just as many (11%) had to cut benefits
  • 1 in 10 respondents actually mandated furloughs or reduced staff hours to cut costs
  • A significant number of nonprofits (38%) reported that they relied more heavily on volunteer labor

Obviously, there are many reasons that people choose the not-for-profit route and pay is rarely the motivating factor. In today’s economy though, less people have the luxury of relying on a partner’s salary in order to take lower pay for “meaningful” work. What’s more, although 73% of nonprofit workers are women, The Chronicle’s recent survey shows that the sector’s known gender pay gap exists even among young, entry level workers. Within this context, it’s easy to see why turnover persists. Nonprofit HR Solutions, a consulting firm, conducts an annual survey of human resource trends among nonprofits. In 2011, 35% of respondents said that “direct service” positions—i.e., health and human service workers, social service providers, etc.—are experiencing the greatest retention challenges. 

In brief, the numbers don’t look good. Perhaps instead of focusing our attention and outrage on one executive’s high compensation, we should actually be discussing the implications of improving pay and benefits for nonprofit workers. Not out of greed, or even fairness, but out of necessity. Without some real changes to our system, we will continue to drive idealistic, talented, educated people away—the very people we need to keep on board if we are to solve the existential crisis facing our sector.

Angela Francis  is a Senior Associate at Nonprofit Finance Fund (NFF). As a 501(c)(3) nonprofit, NFF pushes for improvement in how money is given and used in the sector. Since 1980, we have worked to connect money to mission effectively, so that nonprofits can keep doing what they do so well. NFF provides financing, consulting, and advocacy services to nonprofits and funders nationwide.


Like this article? Get another!

Click here to read "Research Friday: The Trouble with Pay Raises" by Stephanie La Loggia.

Comments

I'm mid-career in nonprofit arts and currently searching for a job so I'm personally experiencing this every day. Many companies here in NYC are searching for a "marketing director" but paying something like $30,000 a year- no one can live on that in New York. Therefore they're shorting themselves all around; they're missing out on good people and anyone they can hire for that salary isn't going to give them the quality they need.

Also, I've had to turn down well paying positions because nonprofits are trying to save money by not offering their employees insurance. I'm not able to get private coverage (til Jan 2014) so I'm not able to consider anyone who can't offer benefits.

I've been in nonprofit arts for 12 years and I'm committed to staying in the sector, but finding a job that pays the rent is a real challenge.

Angela,
Thank you for your insightful post. As a senior in ASU’s Nonprofit Leadership and Management (B.S.) degree program, compensation factors have ensued heated debates within many of our Nonprofit Management courses. As you mentioned, money is not the motivating factor when choosing a career in the social sector. However, celebration of paid internships and part-time work with local nonprofits is an indication that due compensation is on our mind (even before we officially enter the sector). In addition to the financial burden that comes with student loans, there is a looming fear residing in my classmates and myself of inadequate compensation for our educational attainment. We are a special breed entering the nonprofit sector that has extensive knowledge of Resource Development and Acquisition, Financial and Risk Management, Human Resource Management, Programming and Design, Research and Evaluation, Volunteer Coordination and Ethics/Values training. Yes, this knowledge remains theoretical until we can utilize it in our capstone internship and future careers. In accompaniment with experience, does this knowledge and skill-set merit approx. $17K salary differential for entry-level position placement with our W.P. Carey Undergraduate counterparts? The average salary for entry-level job placement for W.P. Carey undergraduates is $49,287 (W.P. Carey, 2012).
I full-heartedly believe in the power of the nonprofit sector and have only scratched the surface of the impact I can make through the sector via volunteering and internships. Unfortunately, many nonprofit organizations may find employees crossing sectors in order to provide for their families and maintain an adequate quality of life. Our only hope is that education, professional development, and new certifications will enhance the status of the nonprofit sector. In turn, this will attract more qualified professionals and ultimately increase mean salaries throughout the sector. Thus, enhancing the sector’s workforce will require hiring and maintaining skilled, educated, and professionally certified employees who will serve as the greatest catalyst in uplifting the mean salaries throughout the sector.
Thank you,
Amy Lindsey
amy.lindsey@asu.edu

Sources:
W.P. Carey, 2012: http://wpcarey.asu.edu/WPCarey.cfm

Great comments on a great subject! So how now do we educate the masses? Even those in the social sector seem to be under the impression that pay is the least of issues. Just look at most grant makers and their restrictions. Most do not allow grant monies to pay for staff. The phrase, "You get what you pay for." rings so true here. How do raise our expectations for nonprofits, raise the scrutiny of the social sector, while lowering the caliber of people we entrust to these duties by paying them below even average standards?
I don't think anyone is expecting to get rich in our industry, but I do think we should all at least be able to pay the bills.
Thank you,
Jerad Hunsaker
Jerad@ASU.EDU

Great insight! My first thought is that most nonprofits employees don’t do it for the money but at the same time to have a higher retention rate you sort of have to pay peoples worth. Although there are some nonprofit companies that do pay fair wages for their employees. I think there is a bit of give and take but such is life.

This article really proved the point in that colleges are graduating students with no jobs to get them out of there debt. Non-profit majors are one of the many who are suffering, but are the ones with the most dedication because there are the ones giving and giving, and barely receiving in return, by getting pay-cuts, and losing staff. I feel this is a real issue in our country and I give mad props to those people who continue to work in the non-profit and all the hard work they put in everyday to benefit there organization and do the best they can do even in struggling times.

This was an interesting read... I would first think that many people that are in the nonprofit field are not doing it for the money. Like the same stereotype we place on people wanting to be elementary school teachers. I do hope that the message can get across to these organizations and look into why talented people are leaving.

This issue could be referred to as the "elephant in the room," for my family and me. I'm on pace to graduate in three semesters, but I can't help but wonder everyday if I will be able to pay the bills when I get out of school. Obviously, I chose this major because I love everything that it represents and all od the good that can be done, but there is a certain point where I think I need to step back and take a logical look at if it is worth it. One thing that I think I have working for me is the fact that I won't be living in an expensive place such as New York City, and I might be able to scratch by when I get out of school. As was stated in the article, we are losing many talented people because of lack of compensation. I really do love the nonprofit field, and I hope that it will all work out. I guess we will see soon!

After reading this article I feel that it really opened my eyes to the struggles of nonprofit. I always hear that money is an issue for the people who work in this sector, but I never really looked into it. Coming from someone who volunteers, but has not looked into this field I feel that this article shows that you have to have the heart for nonprofit and not be in it for the money. I believe that nonprofits should be the most well paid for their amount of work, time, and efforts put into their jobs. I am glad i read this article to have more appreciation for the people who are in this sector, thank you TO ALL OF YOU in the nonprofit field.

Everyone in the NLM program has heard that you don't go into this field to get rich. But when we hear of compensation catastrophes with overpaid CEOs, we are often reminded that in almost any other field, there is a possibility for advancement which could confer a much more luxurious lifestyle. Factor that in with the high stress and emotional toll of many nonprofit positions, reaching into poor communities and broken homes, and we have a recipe for churn.
Although young professionals may accept their poor entry level pay, opportunities for promotion are necessary as families grow and college becomes a concern for parents. If a new employee has to accept low pay, his or her reward should be at least the knowledge that his/her salary will not always be a pittance. Who would be attracted to a position where the pay range is low, and there is no possibility to advance?

Great post! I agree that many of those working in the non-profit field are vastly underpaid. And then you also have some the problem of overpaid executives at non-profits. There are a lot of reforms that could happen within the non-profit world with better management, but the bottom line is that the market will take care of what the donors deem to be important issues. If people are unsatisfied with how a particular non-profit is using their donations, they will donate to another one. Simple as that.

Thanks again for the post.

Blog Archive

2019

2018

2017

2013

2012

2011

Welcome

Thank you for visiting the ASU Lodestar Center website.
Please indicate how you would like to proceed.

Don't have an account? Register today!