The Covid-19 Pandemic upended the global workforce and economy in unprecedented ways, and the nonprofit sector was no exception. A recent article in Candid’s Philanthropy News Digest titled “Nonprofits, Foundations Adjust to the Post-Pandemic Era” examined some of the changes and trends that have marked the past three years. Citing Hannah Martin from the Urban Institute, the article explained that staffing shortages continue to be a major factor for nonprofits, as employees leave the sector due to burnout and insufficient salaries.
It’s no secret that since the pandemic, nonprofit salaries haven’t increased as rapidly as those in for-profit environments, and that this is one of the primary reasons that some employees have made the difficult decision to leave the sector. The 2021 New York Times article “As Workers Gain Pay Leverage, Nonprofits Can’t Keep Up” described staffing shortages at schools and social assistance agencies, which couldn’t compete with businesses that were able to quickly raise wages to attract employees after the pandemic. Individuals in the article described leaving meaningful nonprofit jobs for positions in the service sector that were paying considerably more.
Moving into 2024, the situation seems to be improving somewhat. While the nature of nonprofit budgets and funding models didn’t allow organizations to adjust salaries as quickly or as substantially as those in other sectors, recent data suggests that wages have increased steadily since the pandemic and that cost of living adjustments (COLAs) are being regularly factored into annual budgets. A few notable findings:
- The NonProfit Times’ 2023 Nonprofit Organizations Salary and Benefits Survey reported overall average salary increases of almost 6% for all staff last year and projections exceeding 5% in the current year.
- Candid’s Nonprofit Compensation Report found that median pay for fundraisers grew 6.4% in 2022, and median compensation for top officials climbed 3.2% in 2021.
- Nonprofit HR’s 2022 Nonprofit Talent Management Priorities Survey reported that 65% of respondents were prioritizing total rewards in 2022, and 42% were focused on correcting or addressing pay/benefits inequities.
- The nonprofit HR firm Ascend projects that most organizations will raise salaries by 3–5% in the coming year to adjust for increased cost of living.
Compensation and Pay Transparency
Another trend that is affecting nonprofit salaries is the push for pay transparency and greater equity in compensation models. Assessing pay structure involves considering both internal and external factors. External equity is achieved by benchmarking salaries and wages to those paid in the local labor market. Internal equity is achieved by providing equal pay for the same work, regardless of gender, race, religion, and other non-work-related factors. Internal equity also means paying workers comparably when they have similar skills and provide similar value to the nonprofit. When adjusting salaries, organizations should consider increases that promote greater pay equity, which in many cases may involve larger pay hikes for those at the lower end of the compensation scale.
Pay transparency exists on a spectrum. At one end, a nonprofit can publish the pay and benefits for every position in the organization. On the other end, a nonprofit might not offer any information about pay until the job offer and may discourage staff from discussing pay. The nonprofit world needs to adjust to the fact that cultural norms surrounding pay have shifted to greater pay transparency. And laws are beginning to follow cultural norms; new laws in Colorado and New York City require pay ranges to be advertised. A number of studies have shown that pay transparency leads to greater pay equity, because new hires and current employees have the information they need to make sure they are paid appropriately.
As nonprofit leaders navigate the post-pandemic salary landscape, they should bear in mind that there are a number of factors that need to be considered. Discussions should go beyond cost of living allowances and include an honest examination of pay equity and transparency. While employees might accept that organizations aren’t able to adjust salaries at the same rate as inflation, they may start to look elsewhere if they feel that concerns about inequity or transparency aren’t being adequately addressed. At the end of the day, all members of staff need to feel that they are valued and that leaders are doing their best to create a fair and open compensation system.