Non-Profits Can Pay Reasonable Salaries

I received an email recently from an engineer who was considering a job at a non-profit. They offered him a much lower salary than he was expecting, because they were a “non-profit.” Some people are slimeballs, even if they work at non-profits.

A non-profit has revenue. A non-profit pays salaries and benefits to its employees. What distinguishes a non-profit from a profit-making company is just this: A non-profit does not distribute gains to its shareholders. That's it. The gains go to the employees, the cause(s), the salaries of the top execs, etc. But not to shareholders. The best-run non-profits have most of their gains go to the cause, not the employees, including the execs.

So if anyone tells you they can't pay you a reasonable salary because they're a non-profit, ask to see the salaries of the executive team. I bet those people are paid “reasonably” for their positions. And if they are, so should you.

Lowballing anyone on salary is a no-win/no-win position. Savvy candidates won't take a lower-than-expected salary (unless you're negotiation on things other than money). Employees who realize they're underpaid quickly go somewhere else. And then they'll tell anyone who'll listen how unfair that employer is.

The bottom line is: know your worth as a candidate. If you're a hiring manager, know what this position is worth to you and what people would expect for this position. Then negotiate on salary fairly and reasonably, so you have a win-win.

6 Replies to “Non-Profits Can Pay Reasonable Salaries”

  1. Some non-profits have competitive salaries, my wife works at one. Non-profits cannot offer stock-based compensation, of course, but they may have advantages in other benefits. My wife’s 403(b) plan is much, much better than my 401(k) plan. The limits are higher and the matching is higher.
    Non-profits may also have benefits linked to the organization. Those might be small, like a free museum membership, or large, like tuition assistance.

  2. I work for a non-profit and I am here for the cause. It is a sad reminder every two weeks, when they hand out the pay checks, that I have to earn so little because I am trying to do something that is for the good of all rather than simply help some for-profit company make more money. I have worked for both in my career and I prefer the non-profit because I have a higher purpose for my time spent at work. I angers me that that the execs make a fair wage, but the staff is soooo underpaid.

  3. I have worked in both the for profit and nonprofit sectors, and in both I have worked at good jobs and bad jobs. Pay isn’t necessarily what makes a job good, often having a low base salary at a nonprofit is more due to their lack of understanding of what the market supports then any “slimeball-idness.” If a person will be fulfilled by a job and they can pay thier bills and have good benefits, who much is “enough” anyway?

  4. At one time, I worked for a IT staffing firm that had a blue-chip (health related) non-profit as a client. Their pay rates were about 20% to 25% below market. They knew they were not going to get the cream of the crop and they were OK with that.
    Obviously, “mainstream” IT professionals had little to no (with an emphasis on no) interest in the opportunities with this non-profit. However there were several pockets of resources who seemed to appreciate knowing about these openings. These pockets included:
    1) Recent college graduates
    2) Any junior level candidate living within 5 to 10 miles
    3) Someone who was returning to the workforce after an extended absence (more than a year)
    4) Folks who were tired of the corporate lifestyle, and that were “purpose driven” – especially if they lived within 5 miles.
    From a recruiting standpoint, the fear is, as you indicated, that once hired, they will not stick around long. As such, I try to get candidates to “sell me” on why they want to work for the company. (I use a similar approach when recruiting someone out of town – if they are not able to articulate why they want to move to Dallas, or Denver, or Detroit, then chances are good they will not take the job.)
    Johanna, I share your concern about companies taking the responsibility of paying fair and competitive wages. I think humanity is larger than any one company.
    As I read your comments, I also thought about the hundreds of teachers and school administrators across the nation that go home every night from an often thankless job. Like those in non-profit organization, they bring much more value to the organizations than they are recognized for.

  5. I agree with you. At the time an offer is extended as a candidate, you should have a good understanding of what the duties and responsibilities of the position. Also, everyone should know what their own knowledge, skills, and abilities are worth. If there is a match and both decide to enter into an employment relationship, great! If not, well, back to the drawing board… for both!
    The candidate’s skill doesn’t dictate compensation for a position. Organizaitons pay what the market value is for a person with the required skills to perform the job. And that value is typically lower in non-profit. Its fairly safe to say that people don’t work at NPOs for the money.
    However, the fact is that executives at for-profit organizations with similar duties, responsibilities and qualifications make far more than their counterparts in not-for-profit organizations with the same level of responsibility. As well, I can tell you from personal experience as I have developed a number of compensation plans for both non-profits as well as for-profit organizations.

  6. I believe there are many people willing to work for nonprofits for less than “what they deserve.” The myth that they aren’t leads nonprofits to shoot themselves in the foot by giving technical tasks to nontechnical employees (at a great loss of productivity) or by expecting technical employees to come in as admins or what have you and donate their skills (which, ultimately, is a waste of their own in-house time and talent.)

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