Tuesday, March 24, 2009

What's a "Good" Nonprofit Wage?

By Robert Egger

For a few years now, folks inside the sector have been wrestling with the notion of wage.

As a new generation rides over the ridge, many (if not all) will not be able to make do with the modest wages that nonprofits often offer their new employees. Unlike the founding generation of leaders, this new generation is the first to come into the sector (en masse) armed with both significant volunteer experience AND a degree (often in nonprofit management). This will require them to make a wage that allows them to manage both student loan repayment schedules as well as an alarmingly escalating cost of living. Simply put -- this new generation needs to make a solid wage.

But what is a solid wage? Some have argued that we mist be prepared to mirror wages offered by blue chip firms (six figures), if we are going to attract blue chip talent. But is that the case?

First of all, would the public support these higher wages? As crazy as it is to grapple with misunderstandings about how nonprofits work, and the important role of things like administrative overhead -- the world is what it is. For wages to increase, so must public respect for, and appreciation of, nonprofits. Without that public education, we'll walk right into a wave of populist anger.

Second, as important as a solid wage is, does anybody really need, let alone deserve, a six-figure salary when most Americans will never nudge $50-65K? I must admit, I wonder if it isn't more appropriate for nonprofits to be leading the "all jobs have value - how do we raise the average citizen's wage" debate. Considering that most direct service need is driven by lack of living wages, this tactic might yield better long-term results that further professionalize the sector. 

But perhaps what is most important here is what I refer to as the Tyler Durden question -- will more money actually make you happier? Before you answer, consider taking a look at Baby Boomers. Do they look all polka dots and moonbeams? Now ask yourself -- given all the stuff they bought, why aren't they all grinning ear-to-ear? Then ask yourself, do I want to go down that same road?

Look, I make $85K at DC Central Kitchen (DCCK). That's far more than many working in the US, but much lower than many executives of my experience level. Others at DCCK make more than I do (not a lot, mind you), but this is just my own experiment in wage. My point -- I'm happy as a f****lark. I dig my work. All of us here make a solid middle class salary and everyone has bennies. Most importantly, we rock the city. So while more money might be nice, it isn't essential. Other things are. I focus on that.  

But this is an open dialogue, so I ask -- what do you think?


Ida said...

Sure I am interested in making a comfortable (not lavish) living while doing something I am passionate about (my bottom line is that I should NOT be making the equivalent of my annual school expenses). But what I am really concerned about is the serious lack of upward mobility in the nonprofit sector.

Also, there are very few positions in organizations for Masters Degree holders with some experience. Most positions seek college graduates with no work experience or senior managers with more than 10 years under their belt.

On an unrelated note, kudos to DCCK for running a stupendous volunteer program!

Tamara said...

Yes, those in the nonprofit world need a financial bump to be able to pay their loans and keep up with the costs of housing, transportation, food, etc. However, I don't think nonprofits should (or can) offer salaries competitive with large firms in the private sector. I don't want to speak for all but I don't think most people working at nonprofits are in it for the money. Like Ida, said, I'm interested in working for a cause I'm passionate about while making a comfortable living.

I think once you offer salaries competitive with the corporate market, you risk attracting people who are more interested in a large paycheck than they are the mission of the organization. I think then you start to lose sight of the people you are serving.

JARRIN said...

Tamara, no offense but I’m left to assume by your comment that you must have never worked for a corporation. Either that or you missed the point while there.

I work for a corporation. In fact, it’s a Fortune 500 company. I can guarantee you that my job security is contingent on my performance as I execute the mission of my organization. Companies use compensation and other incentive tools to retain talent and in return they expect superior performance. If all I cared about was money, I would lose sight of the products we make, thereby stifling the ingenuity and evolution of those products and ultimately help to destroy our sales.

I think it’s fair to say I probably care more about my company’s mission than my paycheck because without a well defined mission, there would be no paycheck.


Mr. Magister said...

To play devil's advocate, just as sometimes public sector and private organizations fill different roles in our society and economy, they also occupy different parts of the job market. One thing that differentiates jobs available in each might be wage, and job candidates factor this information into their decisions as they navigate the job market. If money matters a lot to a person, then that person can look for a job which pays him enough. Any attempt to manipulate free market wages smells like duplication of what the minimum wage and the tax code already try to do.

Also, a completely separate point: I don't think that questioning somebody's desire for wealth should factor into a discussion of nonprofit wages.

That said, I completely agree with the point about "how do we raise the average citizen's wage." This, combined with an argument about the positive externalities of nonprofit work, might make a case for higher nonprofit wages. In fact, you might be able to come up with a solid counterargument to the stuff I wrote about free markets above.

I also like the related point about populist anger. Nonprofits play a key role in our social contract or safety net. In one sense, people's decision to work in a nonprofit for a lower wage is a social decision -- you are putting others before yourself. The right wage allows such people to be citizens, not martyrs, and it's completely fair to remind others of this.

Tamara said...

JARRIN, I've never worked for a corporation, no offense taken.

I feel like you backed my point. You said you care more about your company's mission, otherwise there would be no paycheck. Therefore, caring about the mission is a means to an end. The end being the paycheck. The paycheck is important but I believe the work of the nonprofit and the people served by them are even more important.

I take offense to "incentive tools" as a means to retain talent and ensure "superior performance." Working for an organization that has strong leadership and does as superior job of serving those in need should be incentive enough. It is for me.

Anonymous said...

I've had the unique opportunity of working in very strategic positions in both the corporate and nonprofit sector.

Most people I know, whether or not they've given their lives to a nonprofit mission, desire meaning in their jobs (whether that meaning is helping someone find the care they need, or that meaning is the accomplishment of ascending the partnership ladder), at a fair wage. When I worked for a major global corporation, I wanted to feel good about what I did, and wanted to be appropriately compensated. I wanted the same when I left to work in the nonprofit sector (which I took a massive pay cut to do). When I discovered (thank you Guidestar and the public reporting of nonprofit 990s) that I was being grossly underpaid compared to colleagues doing the same exact job, I have to say, it was the beginning of the end for me in that role, precisely because I wasn't in the job for the money. The same was true in my most recent nonprofit role, when I discovered my boss, who had much the same functional role that I had (she described me as a partner), made almost double what I made. I wasn't doing either of those jobs for the money, but the lack of care shown for my compensation relative to others at the same experience level was demoralizing. I expect more of organizations whose very purpose is to advocate for others.

Those in the nonprofit world definitely don't do it for the money, but inequities in compensation certainly undermine the very passion that enables us to joyfully and willingly make sacrifices to do what is meaningful for us. Perhaps, while we're considering the subject of appropriate compensation, we should also consider the question of financial accountability and transparency of nonprofits.

As for attracting people who aren't passionate about the mission, by offering higher wages, no amount of money could convince me to do something I wasn't interested in, or passionate about. I'm guessing that on that point, both Tamara and Jarrin are agreed. And maybe I have too high a view of humanity, but I have to believe that generally speaking, those working for nonprofits self-select, and not just because of the compensation.

I have one last comment on compensation. While many in the sector believe we are paid below our counterparts in the corporate sector, we (as nonprofit executives) grossly exaggerate the extent to which this is true - yes, even those of us with graduate student loans to pay off. Don't take my word for it, read this report published by CompassPoint and The Meyer Foundation - page 17 on talks about nonprofit executive compensation. http://www.meyerfoundation.org/downloads/4DaringtoLead2006d.pdf