November 18, 2017
 
How to Negotiate Compensation with a Nonprofit

By Angie Salmon

Angie Salmon
Negotiating a nonprofit compensation package can be a tricky endeavor. As with any type of negotiation, being able to see things “from the other side of the table” is helpful and will ultimately lead to a better outcome for all involved.

First and foremost, compensation is more than a base salary and a job candidate should consider all aspects of the total package. In addition to bonuses, health benefits, and vacation time, a nonprofit organization can also boast its unique mission as part of its attraction to candidates.

An executive should also keep in mind that nonprofit organizations are under increased scrutiny when it comes to compensation. Board members and executives may be personally liable if the IRS finds executive compensation unreasonable. Many nonprofit organizations have started utilizing sound methodology such as independent boards, external compensation consultants, and market surveys to set the overall compensation strategy. Therefore an organization may not have complete flexibility during negotiations.

Due to reporting requirements, the compensation of nonprofit leaders is very visible to other staff, the general public, and important donors. During negotiations, remember that your compensation may drive public perception of you and your future employer.

So how can a nonprofit executive appropriately navigate a compensation agreement and ensure that it does not negatively impact the beginning of a long-term relationship?

Pre-negotiations to Consider
  • Conduct research – There are several resources available, including compensation surveys and other market data, that may be helpful in determining an appropriate range for a position. The organization’s 990s will provide budget and recent salary information – two factors that will likely drive the compensation range for your position.

  • Understand the organization – By the time you are offered a position (and hopefully before) you should have a good understanding of the mission, vision, and culture of the organization. Awareness of the culture will help you determine how to best negotiate.

  • Know your own requirements – Go through your own financial situation and consider the aspects of a compensation package that need to be in place for you to accept an offer.

  • Discuss compensation before negotiations begin – Salary is typically a topic that is broached during the interview process. There are several tactics you can utilize to appropriately navigate the conversation:
    • Ask the interviewer to disclose the compensation range for the position or the salaries of similar roles within the organization.

    • Explain the aspects of your current/most recent compensation package, including base salary and other incentives/benefits. Your research on the position/organization will help frame your answers regarding your previous salary.

    • If pressed for your compensation requirements, provide a range that is realistic based on your research, interest in the position, and your own financial needs.
If You Plan to Negotiate

Perhaps you have gone through the steps above and ultimately receive an offer that you plan to accept. If you plan to negotiate the offer, however, keep the following in mind:

  • Once an offer is made, don’t respond immediately to the value itself. Thank the person, show your enthusiasm for being selected, and ask for some time to consider the offer.

  • If you haven’t been given insight regarding all aspects of the package (benefits, premiums, retirement, vacation, etc.), ask for the details.

  • If the offer is still lower than you expected based on your research and previous discussions, ask how the final offer was determined and whether there is room to negotiate.

  • Describe why you believe that a different level of compensation is warranted, including your unique qualifications and value, the market for similar nonprofit positions or level of pay for comparable roles within the organization itself.

  • Assuming the offer is “in the ballpark,” outline the aspects of the compensation that you hoped would be higher – salary, bonus, etc.

  • Remind the person that compensation is not your primary interest in the position and thank him/her again for their confidence in selecting you as the final candidate. Ask about a timeframe to make a final decision.
Try to avoid multiple rounds of negotiations. Nonprofit organizations typically have less appetite for this activity than their corporate counterparts and may begin to question whether a candidate is committed to the mission. If you get the sense that the organization is suffering from negotiation fatigue, do what you can to bring discussions to a conclusion quickly. In the end, it is ultimately your decision whether to accept an offer or decide to part ways. Either way, it is worthwhile to ensure the relationship remains positive.

Angie Salmon, senior vice president of EFL Associates, a CBIZ company, leads executive searches in the nonprofit arena. She can be reached at 913-234-1576 or asalmon@eflassociates.com.

July 2012

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