There have been numerous discussions around the issue of compensation in the nonprofit sector. While this may not be the primary reason for the leadership deficit in the sector, it is a critical piece that we all need to consider.  According to the Ready to Leader? Next Generation Leaders Speak Out report, close to half of their survey respondents worry that they would not have enough money to retire comfortably. Four in ten note they are unable to make enough money to support themselves and their families.

This was curious to me. Is one really doomed to hardship in the nonprofit sector? While most of my career has been in the nonprofit sector, six years ago, I did manage to gain economically by hopping from the government to the nonprofit sector. I could say the same for my previous “hop” (in 1998)- from the private sector to the nonprofit sector.

And so, I began my search for the enlightenment on this question. I have seen a number of nonprofit compensation and benefit surveys which show really appalling disparities between male and female CEOs and, between small and big organizations. But, on average, are people compensated less if they work in the nonprofit sector?  On a simple Google search, there did not seem to be a lot of information out there to address this question. Then I found the Bureau of Labor and Statistics website which publishes the national compensation survey data and for the first time in September 2007, they had featured data for nonprofit establishments in their wage bulletin (heaven!).

The average hourly wage of all workers in the private sector is actually 11% less than the nonprofit sector average. On the other hand, the average hourly wage of all State and local government sector workers is 17% more.  Other occupation types where nonprofit workers actually earned significantly more than their private sector counterparts include:

  • Food preparation and service related
  • Protective service
  • Education
  • Training and library
  • Sales (maybe development and marketing in a nonprofit organization)

And where do you think nonprofit sector workers earned less compared with their private sector counterparts? Not surprisingly, CEO, lawyers and legal, management, business and financial operations, computer and mathematical science positions all paid significantly more in the private sector.  In comparison with their public sector counterparts, protective service, transportation, production, personal care and service and community and social science positions earned significant more. (I do have a fancy charts to show these for anyone who is interested).
What does all this tell us? Not all positions in the nonprofits receive low pay relative to the other economic sectors. Average wage is in fact better than private sector and a number of positions actually receive more than their private and public sector counterparts. The rub is when you are talking about the management, business operations and executive-level positions where the clear disparities are highlighted between the nonprofit and the private sector.

Also, we must bear in mind that most small nonprofit organizations may not have been included in this survey especially those that have volunteer staff. Benefits are another issues and may be subject of further exploration on another lazy Monday afternoon!

Susan Morales-Barias (X’er)