September 25, 2017
 
Moving to a Nonprofit? Let's Talk About Compensation

By Karen DeMay

Karen DeMay
Conversations about compensation can be complex, especially if you are not armed with the knowledge you need. This can be particularly challenging for “bridgers,” individuals transitioning from for-profit to nonprofit management positions.

Bridgers may be used to negotiating compensation packages that are structured with incentives and need to be knowledgeable about and comfortable with the realities of nonprofit compensation. To that end, bridgers should understand key questions such as:
  • What can I expect to earn when they move into the nonprofit sector?
  • How can I figure out whether I can make a salary I can live with in the nonprofit sector?
  • Where can I find information on typical compensation packages for the kinds of jobs in which they’re interested?
  • What are some of the specific factors that determine a nonprofit salary?
  • Should I bring up compensation or wait for the interviewer to raise the issue?
  • How should I handle talking about compensation when the time comes?
  • How does compensation differ between the for-profit and nonprofit sectors?
Based on our experience, bridgers should:
  • Understand that nonprofit salaries can vary greatly even within a given position, domain, organization size and geographic area. According to The NonProfit Times 2007 Salary Survey, the average executive director (ED) salary in the central United States is just under $100,000, compared to more than $130,000 in the mid-Atlantic region.

  • Understand their personal finances before assessing job opportunities. As a start, they can take stock of their current compensation package, including health, dental, retirement plan, discounts, transportation subsidies and other secondary benefits included.

  • Determine what changes they would be able and willing to make for the right opportunity, and whether they can realistically manage with less money.

  • Research compensation within the positions and organizations they have targeted. If the difference between what the candidate is looking for and what organizations are offering is off by a factor of two or three, the candidate may need to reconsider one or more of the criteria used to target their search. Bridgers should also consider that annual increases at nonprofits are likely to be more modest.

  • Be wary of pursuing a position that appears to be a great fit, but is well outside their salary needs. It can often result poorly for the individual and the organization.

  • Turn to salary surveys published by GuideStar; the Chronicle of Philanthropy; The Nonprofit Times; and Abbott, Langer Association, among others to learn about salaries in the sector. To understand the compensation structure at specific nonprofits, individuals can download its full IRS Form 990 from the GuideStar website.

  • Consider the positions or organizations they want to research and conduct informal benchmarking since many compensation surveys are based on a fee basis. A combination of approaches is advisable, e.g., nonprofit salary surveys, IRS 990 forms, and networking, talking to people who might have insights into compensation at particular types of organizations.

  • Understand the key factors influencing nonprofit salaries: the role and responsibility of the position; required experience, education and certifications; organization size; the sub-sector or domain; geographic location and the organization’s overall compensation structure and traditions.

  • Mention upfront in a cover letter or early on in the process if they are willing to take lower salaries than an organization might expect. This way, they may not get inadvertently screened out because of any mistaken assumptions about salary. Be forthright when it comes to discussing compensation about their self-assessment, their current compensation, and their needs and how they have determined them.

  • Understand the differences between for-profit and nonprofit compensation. While equity and stock options aren’t available in the nonprofit sector, bonuses and commissions exist and are becoming more common, albeit the exception rather than the rule. Nonprofit organizations cover only a portion of a relocation move, and expensive perks such as company cars are extremely rare. However, some nonprofits, particularly larger ones, have excellent health and other benefits, and many offer flexible schedules and time-off.
The complete article is available to Bridgestar members (membership is free) by clicking here. For a complimentary subscription, please email to subscribe@bridgestar.org.

Karen DeMay is Regional Director of Talent and Recruiting at Bridgestar, a nonprofit initiative of the Bridgespan Group dedicated to attracting, connecting, and supporting executive leaders for the sector.

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