When nonprofit staff are paid so low they qualify for their org’s services

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A while ago, at the request of some colleagues, I talked about “Nonprofit Math” and created a little video that went viral. One of the examples I brought up was “paying your staff so little that they qualify for the services your organization is providing.” That line got a lot of chuckles.

It’s so great how we can laugh at ourselves! One of my favorite pieces of humor is an Onion article called “Nonprofit Fights Poverty with Poverty.”

But OK, a lot of humor is rooted in at least some fraction of truth, and it’s time we confront this one. Although the idea that some people are paid so little they could qualify to be a client for their own or another nonprofit’s programs seems ridiculous, the reality is that it does happen. And probably with more frequency than we realize. Last week, a friend of mine who lives in a very expensive area of the US texted me this:

Let’s talk about nonprofits that don’t pay a living wage. My current survival job pays me $27.50 an hour (their original job offer was lower, and the top of the range is $28) as a career coach in a program for finding people employment at a living wage. I qualify to be in that program because if you make under $35 an hour, you qualify as low-income enough to get into this program. The MIT living wage calculator says a living wage in this county is anything over $28. Irony! I coach people to go on and make more money than I make as their coach!”

Here’s the kicker. “The mission of this organization is to end poverty!” Yikes!

In this sector, there are so many things I realize we just take as a par for the course; we accept them with a “when in Rome” attitude: “When in nonprofit, do what nonprofits do: pay everyone as little as possible.”

Besides low wages, there are other things. Poor benefits. Six dollars per person per year for professional development. Lack of any sort of retirement benefits. Chairs that are duct-taped together. A gift card to Ross Dress for Less as a Christmas bonus.

But this is just not tenable. We can’t keep accepting all of this as normal. Not when there’s more and more reports of nonprofits being unable to recruit and retain people, with vacancies often lasting for months, and fewer people wanting to lead nonprofits. It affects the entire sector. So many brilliant colleagues I’ve known over the years have left the field, taking their talents with them.

It’s time we get serious about this, and tackle it at the org, sector, and societal level:

At the organizational level:

  • Assess your current wages: Do an audit of your existing wages and see if they meet your area’s level for living wage and if any of your staff qualify for your low-income programs. And remember that your area’s living wage is the floor, not the ceiling. You should aim to surpass it.
  • Prioritize fair compensation: I remember being an executive director having to craft a budget. We are trained to be scrappy and it’s reflected most painfully in the wages. Don’t just make up numbers. Use the local wage surveys, and aim for at least the median for your area. Have a plan, if you don’t already, to meet and exceed the local averages over the next two years.
  • Analyze the disparity in wages: Although Eds/CEOs and other senior leaders are also underpaid compared to their counterparts in other sectors, especially for-profit, it is still disconcerting when senior leaders make significantly more than other staff. Think about having a ratio of some sort, where the highest paid full-time staff cannot earn more than x times the lowest-paid full-time staff.
  • Align with your principles and values: It’s ironic, as my friend says above, that her organization has the mission to end poverty while paying their staff poverty-level wages. That is a complete misalignment of mission, values, and practice. Go through your values and discuss whether your compensation practices live up to them. Use your values to develop some philosophies around compensation at your org.
  • Be honest with funders and donors: We need to tell the full story when it comes to what is needed to compensate staff fairly. The full story is reflected in a budget that accurately captures what the org needs to be successful. It’s also important to be vocal to your funders, donors, and partners about your compensation philosophies. The more nonprofits they hear are trying to pay living wages, the more the messages will sink in and the more supportive they will be.

For funders:

  • Encourage grantees to pay living wages: Nonprofit leaders have been trained to put together scrappy, bare-bones budgets. And some funders seem not just ok with that, but to encourage it by giving funding and attention to those orgs that prove themselves to be “scrappy” or efficient or whatever. Knock that off. Encourage nonprofits to pay their staff fairly.
  • Give out more money and immediately: Increase your payout rate and give out more money. At the very least, increase your grants to match inflation, since the money you granted out several years ago is worth significantly less.
  • Provide MYGOD: Give Multi-Year General Operating Dollars. A lot of scrappiness we see in the sector because y’all have trained nonprofits to be thrifty by giving unpredictable one-year grants. How can they not be scrappy and survival-oriented when there’s so little predictable, long-term, unrestricted money that would allow for planning. Give general operating funds, and ones that extend across several years.  
  • Tell other funders to be supportive: We all know most funders only listen to one another. Use your role and access to bring awareness to your colleagues about the seriousness facing nonprofits in terms of compensation, recruitment, retention, etc. Encourage them to give out more money.

At the sector level

  • Encourage nonprofits to pay fairly and encourage funders to fund it: I know intermediary and support organizations such as nonprofit state associations have been doing some of this. We need more of it, and more aggressive campaigns to get nonprofits to pay fairly and for funders to be OK with increasing the amounts they give out.
  • Advocate for living wage legislation: Work with advocacy organizations to put local, state, and federal laws into place that require nonprofits to pay their workers living wages.
  • Advocate for nonprofit support programs: We need to be more aggressive and organized regarding government programs specifically designed to benefit nonprofits, such as tax breaks for nonprofit workers, subsidies for improving nonprofit staff wages and benefits, etc.

At the societal level:

  • Shift mindsets regarding nonprofits: There’s a pervasive notion among society that nonprofit work should be low-paid or even entirely volunteer-run, which undermines the professional nature of our work and thus leads to low wages. I’m not exactly sure how we can most effective address it, but maybe we can start with ore op-eds in local newspapers, more appearances on other media such as radio and TV.
  • Educate people about fair compensation: There seems to be so many misconceptions and misgivings from the public about how much nonprofit staff should be paid. We need to do a better job as a sector to educate people outside our sector.

For so long, we keep joking and laughing about how poorly paid nonprofit professionals are. We need to do something about this. We can’t keep up with this “when in Rome” philosophy. After all, the Roman empire fell. And if we keep going the way we have been, with poor compensation driving out good staff and preventing great people from entering in the first place, our sector will continue to lose effectiveness, and it’s our community members who bear the weight of it.

Let’s prioritizing paying our people fairly. Let’s stop fighting poverty with poverty.