The High Cost of Low Nonprofit Pay

Nonprofits have perpetually been known for low-paying jobs. Many groups, especially those hit hard by recent funding cuts, have muddled along by choosing to pay substandard wages. But leaning on a culture of self-sacrifice can cause problems in the short term and may result in fewer workers to carry out important missions, say sector observers. The problem is so widespread that one in five nonprofit workers falls under the category of “asset limited, income constrained and employed,” known as ALICE workers, according to research conducted by United for ALICE in partnership with Independent Sector, whose mission is to strengthen civil society

“These are workers that are above the federal poverty line but don’t make enough to sustain themselves in the county in which they live,” Akilah Watkins, CEO of Independent Sector, told the Chronicle in a conversation late last year. “Twenty-two percent of our work force are ALICE workers — that’s millions of people.”

Without a fix, workers may leave the sector, causing problems with turnover and constraining the future pipeline of managers and leaders. Because this is a big and long-standing problem, Watkins notes, it can’t be fixed overnight: Many nonprofits are worried about whether they’ll have enough money for next year, let alone for increased pay. But it’s important for the issue to be discussed more openly and for organizations to be aware of the concerns and use them as a starting point for fixing the problem, she says.

“Nobody gets into the sector because they want their employees to be economically suffering,” Watkins says. “If we educate both the nonprofit and philanthropy side about ALICE workers, we think that we can come up with a solution to say, ‘How can we invest in this particular work force to bring them up?’”

The True Cost of Nonprofit Work

One of the first things organizations should do is be realistic about what it takes to run a nonprofit, Watkins says.

“People think, as we increase wages for employees, that we will have less money for programs,” she says, but notes that way of thinking is based on a flawed model of what works. “We pride ourselves on making a dollar out of 15 cents, but that is not a sustainable model. We have to educate philanthropy on what the true cost of running a nonprofit is.”

BridgeYear, a nonprofit in Houston that helps high school students graduate with stable employment, has tried to focus on pay from its inception roughly a decade ago.  Because the group helps young people find jobs that pay a living wage, it wouldn’t look good for staff not to meet that criterion, too, says Victoria Chen, executive director. That the board understands the true cost of staff helps, she says. “We have a great board who really understands you can’t do nonprofit work without great people,” she says.

BridgeYear had experienced a lot of turnover in part-time staff until improving compensation and benefits packages. Many of the part-time staff work at in-school programs. Before its changes, if staff showed up and the school was having an unexpected issue (such as a fire drill) and they couldn’t do the program scheduled for that day, they wouldn’t get paid.

Chen says the group changed its policies to pay staff for scheduled shifts, even if they couldn’t work due to unforeseen events. It also allowed part-time staff to join their benefits program, including the retirement plan. That move, Chen says, has made it more appealing for part-time workers to transition to full-time staff, as they’ve often met minimum vesting periods for benefits.

Workload Exacerbates Pay Problem

Many nonprofits that are facing steep losses in funding are relying on employees to do too many jobs. That kind of overwork can lead to burnout, Watkins says.

“A lot of the sector — they feel like they’ve been working at such a high level for so long,” she says. “We don’t get any lulls.”  She notes that some people are doing 60 hours’ worth of work and getting paid for only 40, and that’s not sustainable.

Staff who are making a low salary and working excessive hours are at risk of leaving the sector and not coming back, says Evan Wildstein, co-lead of the Social Impact Staff Retention Project — an annual survey of nonprofit staff. In fact, his survey found that seven in 10 employees are looking for new work, with some choosing to work outside of nonprofits.

Some staff “will say, I’m just going to go down the block to make coffee,” Wildstein says. “Cause if the pay is the same but I can hang up my apron at 5 p.m., at least there’s that.”