Thoughts on Pay Equity in the Nonprofit Sector

The nonprofit sector continues to be squeezed at both ends. Internally we see a push to increase salaries and overall compensation; externally we see an environment with decreasing donations and heavy restrictions on contract/grant funding.

Going beyond Dan Pallota’s book and movie of the same name UnCharitable how the assumption that nonprofit work is “charity” works continues to be a pervasive assumption. Nonprofit Quarterly published an interesting article in March 2022, reminding us that even in the early 1980s nonprofits were not expected to follow the same regulations as for-profit employers.

Nonprofit employees were initially not covered by the FLSA (Fair Labor Standards Act) or the Affordable Care Act. Even the general public surveyed believed nonprofit staff should not be paid equivalent to for-profit staff. Startling data points:

• 42% surveyed agreed that employees of charities should receive wages comparable to for-profit employees

• 34% surveyed agreed that employees at nonprofits should be paid less than their for-profit counterparts, but enough to earn a living

The reality of the higher costs of living, less affordable homes, and the inability of many staff to live on a nonprofit worker salary requires the industry as a whole to take action. So what can we do?

• Educate donors about the important role of nonprofits in delivering services to the community

• Provide support to your staff or board members to share with donors how nonprofits function

• Provide opportunities for legislative and local community training on board service, nonprofit contracts and more

It’s great to see the Nonprofit Association of Oregon active in the legislative cycle and more nonprofits step forward as advocates for fair wages and benefits. Also pushing forward efforts to look at grants and contracts to pay at the full cost could go a long way in alleviating salary deficiencies.

Another approach is to look at how nonprofits are staffed and how managers are supported. Organizations should consider whether a full-time position is necessary or if bringing on temporary or fractional staffing could increase organizational capacity and make the work less stressful. NPN is exploring greater options in this area and we are happy to talk to you about job descriptions, metrics, and staffing needs that you may have to be creative, thoughtful, and fair.