Salary Freezes Grow More Common, Study of Northern Calif. Charities Finds

A growing number of Northern California charities are freezing salary budgets in direct response to the poor economy, according to a new survey.

Forty-one percent of the organizations in the survey reported salary freezes this year, up from 35 percent last year, and only 8 percent in 2008. Among all groups, including those with salary freezes and dips, the median rise in compensation budgets was 2 percent, down from 3 percent in 2008, and 2.5 percent last year.

The survey, by Nonprofit Compensation Associates, in Oakland, Calif., also found a growing number of charities cutting back, if only slightly, on health and retirement benefits.

Many groups are increasing the average co-payments that employees must cover for doctor visits, and shrinking the size of their contributions to employee retirement plans. Last year, for example, the average maximum contribution to retirement plans represented 5.4 percent of an employee’s salary. This year, that percentage dropped slightly to 5.1 percent, the lowest share reported in the survey’s 32-year history.

“There’s often a delayed reaction to the economy because organizations plan ahead with their budgets, so we are seeing more salary freezes and cuts in other compensation and benefit areas this year than last,” says Rita Haronian, project manager of the survey. The report covers 427 nonprofit groups in Northern California that employ a total of more than 20,000 people.

More Raises Expected

But Ms. Haronian says the survey results demonstrate some positive signs, too. Among the organizations that reported salary increases this year, the average size of the increases—3.4 percent—was bigger than last year’s 3.2-percent average rise. In addition, half of the groups reported having given across-the-board raises to employees sometime over the previous year; 57 percent said they expect to give such raises in the coming 12 months.

• Average annual salary for the top official at charities with the smallest operating budgets (less than $500,000) is $75,811 this year.
• Among organizations with budgets of $2.5-million to $5-million, chief executives earn an average of $122,930.
• Groups with budgets of $15-million or more are paying their top official an average of $179,856.
• Salaries for male executive directors outpace those of their female counterparts by 11 percent, the survey found. Among some of the smaller charities, though, women average higher pay than the men. That is a sign, the report says, that men are more likely to hold jobs at the biggest charities, even though 61 percent of all chief executives in the study were female.

“The big groups pay more and that can make sense,” Ms. Haronian says. “What we have to take a look at is why women may be underrepresented in those positions at those organizations.”

Fair Pay for Northern California Nonprofits, sponsored by Hood & Strong, an accounting firm in San Francisco, is available for purchase by nonprofit organizations on a sliding scale based on their annual expenses and whether they participated in the survey. Businesses and individuals can purchase the report for $750.

For more information about the survey, visit the Nonprofit Compensation Associates Web site.