This is a question that comes up a lot. On the one hand, donors and nonprofit employees are trying to solve big problems, and there’s a risk that paying the executive director a large salary will pull money from other critical areas. On the other hand, nonprofits are competing for talent and a large salary can help attract the kind of executive who will increase the amount of money available to solve the problem. It’s a dilemma, and one that’s hard to find a solution to.
I’m not going to try to solve it here. I’m just going to offer two observations.
First, this question is almost always phrased in terms of executive salaries. Of course, it’s usually also being answered by nonprofit executives. But if nonprofit executives are concerned about the larger issue of pay equity – and not just trying to justify their own salaries – then this question needs to be expanded. The conversation about pay needs to include development staff, program staff, technology staff, administrative staff, custodial staff, and everyone else.
Second, the answers to this question always compare nonprofit salaries to for-profit salaries on the basis that the for-profit salary is normative. We tend to think that the for-profit leader making a $400,000 a year in total compensation is the benchmark, and that nonprofits need to be able to compete with that in order to attract the talent we need. We don’t question whether it’s reasonable for that for-profit executive to be making about eight times the median household income in the United States. This is a conversation that should include earners (and non-earners) throughout the for-profit, nonprofit, and public sectors.
Neither of these observations are meant to imply that Joan’s post isn’t a very good one. They’re just to say that the conversation about pay equity needs to be much, much bigger than a conversation about nonprofit executive pay. And it needs to reflect the values that the nonprofit sector embodies.