Fair and Equitable Compensation in Nonprofit Work

ED LuncheonNonprofit organizations and their leaders provide much needed support to many communities around the world. Deep satisfaction in helping others and the desire to create positive social change drive many individuals to join the sector. Like any sector though, nonprofits need to attract, recruit and retain well-qualified leaders. Competitive compensation and attractive benefits support this goal.

Relevant and timely data is required for us to begin the discussion of competitive compensation and benefits.  In Asia, very few public sources are available to help board members and donors determine reasonable compensation for non-profit executive leaders. In the U.S., several annual surveys address the pay and benefits of nonprofit organizations nationally and within particular regions and states, but none to date have focused on compensation levels within the Asian American community. At the request of community organization board members and executive directors, the Chinese American Community Foundation explored the possibility of creating a benchmark survey.

In March 2015, the Chinese American Community Foundation asked San Francisco Bay Area Asian American groups to participate in an online survey to learn more about their organizational practices regarding executive compensation. The survey was sent to 89 organizations and twenty-nine responded to our survey, representing a 33% response rate. Below are some findings:

* 21% of the executive directors in this study were founding directors.

* 44% had been in their position for 10 or more years and only 20% had served in a similar position in another organization.

* The survey found the median salary for executive directors in this group was $90,000. In comparing the median salary with the 2014 Fair Pay for Northern California Nonprofit study ($128,253) and the 2014 Charity Navigator (west coast states) salary survey ($125,000), respondents to this survey are making approximately 30% less than nonprofit executive directors responding to the two comparison studies.

* 82% of respondents receive health insurance (not including dental or vision), 75% receive paid time off, and 61% receive retirement benefits.

This survey also suggests potential need for succession planning in the participating nonprofit organizations as 71% of current executives are between the ages of 50 and 69, and 44% of executives have been in their position for 10 years or more.

While this survey is of minimal help for nonprofit leaders and donors in Asia, it is a beginning step in understanding how important it is to have compensation data for our sector. Individual donors are sensitive to executive compensation practices and transparency on the topic helps organizations begin the conversation of how important program and administrative expenses are in delivering the much needed services to the community.

Donors completing due diligence on organizations review salaries of staff. Excessive compensation raises questions but so does not enough compensation. Donors want to ensure organizations and programs are sustainable and unrealistic staff support raises questions of competency and success. Without data to compare with, many donors are relying on what the nonprofit is reporting and they may or may not verify the ranges with other local advisors.

For nonprofits who wish to ensure that donors support their projects, they may purposely push down the programmatic and administrative expenses. This distortion of what the true cost eventually hurts their future fundraising work and also the entire sector as donors now have a misconceived perception of costs.

It is my belief that dialogue and data will help address this issue. In my conversations with Asian American nonprofit leaders and those in Asia, many are shy about bringing up the topic of compensation. It may have to do with cultural and social perceptions that what we are doing is for social good and thus we should not be compensated for it. The civil society and nonprofit sector may not be as readily accepted by the general public and thus the professionalization of the sector is still developing. In addition, there may have been instances where donors have not been educated on the issue and/or even if they were, they may have a particular mindset on how things should be. Finally, even if fair and equitable compensation is embraced, there is the issue of where to raise those additional funds. While all these issues take time to dissect, without data of where the sector currently stands, we can only talk in hypothetical terms.

Download the 2015 Chinese American Community Foundation Executive Compensation Survey

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