Innovative Trends in Non-Profit Executive Compensation
Salaries for top executives at nonprofits have climbed 25% to 50% since 2000. A new survey of nonprofits found that among nonprofits with operating budgets over $20 million, 15% more chief executives and executive directors of these organizations earned $250,000 to $350,000 last year. Several factors are boosting pay:
- Greater competition among nonprofits to attract top talent,
- Difficulty in retaining staff and a lack of internal candidates for some important positions, and
- Nonprofits’ desire to lure corporate executives, as the finances of non-profits have become subject to greater government scrutiny.
In addition to higher pay, some nonprofits compensate for the lack of stock options and other corporate extras by allowing flexible work time. Others even pay bonuses, once rare at nonprofits.
However, as noted by the Chronicle of Philanthropy, in a recent survey of executive compensation in the nonprofit world, nonprofits need to be careful when boosting compensation. Donors may worry that a charity could shortchange its mission if it spends higher amounts to recruit and pay executives. Moreover, the Internal Revenue Service has begun examining executive compensation at nonprofits with an eye toward uncovering potential abuse. It issued a report earlier this month that found "significant reporting errors and omissions" about salaries by such groups. Over the last several years, interest in nonprofit compensation has been growing. Understanding the need to recruit and retain quality staff has added to the concern over how to structure compensation policies and programs to be fair and competitive. Incentive plans and other innovative compensation and human resources practices are becoming critical elements in the organizational strategy of many nonprofit organizations.
Innovative compensation practices encompass cash compensation and recognition plans. The following are examples of innovative cash compensation or recognition plan options that are studied in the report.
- Individual incentives
- Team or group incentives
- Bonuses
- Spot awards
- Special cash recognition
- Special non-cash recognition
Some of the findings were the following:
1. Rationale for developing plans
- Nonprofits indicated multiple reasons for creating new programs. More than half of the participants indicated their program objectives included the following: improve morale and/or employee relations; improve employee retention; link pay to performance/improve employee performance; and become more competitive in total compensation (i.e., cash compensation, recognition, and benefits).
2. Types of plans and performance measures
- The most popular types of cash compensation and recognition programs implemented by the participants were bonuses, incentives, and non-cash recognition programs.
- Productivity, financial, and quality measures were the performance criteria most often used as the basis for the respondents’ compensation awards under a variety of programs.
3. Budget and award amounts
- The average variable compensation award payouts typically ranged from 20% - 30% of salary. In some organizations, the targeted payouts ranged from 10% - 20% of the salary range midpoint. Interestingly, in Astron’s confidential database of nonprofit organizations, target incentives levels are as follows:
- Staff / Non-Management: 5% - 10%
- Supervisory Staff: 5% - 15%
- Middle Management: 10% - 20%
- Senior Management: 15% - 30%
- Executive Management: 20% - 40%
- CEO: 30% - 50%
The following are guidelines to be considered by nonprofit organizations which may be interested in implementing an innovative compensation plan.
1. Nonprofit organizations should first conduct an assessment to determine the appropriateness of innovative compensation to their culture and organization. This assessment should focus on the objectives to be achieved through implementing an innovative compensation program, what motivates staff, the opinions and views of members, constituents, and volunteer leaders, and the financial resources available.
2. Any innovative compensation program should be viewed as part of a total approach to compensation and carefully integrated into the design of that program. A market analysis of current compensation levels related to the jobs in the organization should be conducted in the early stages of or prior to developing a program.
3. The innovative compensation program, especially management incentive programs that provide significant opportunities for financial rewards, should be clearly tied to performance. The program should demonstrate the achievement of overall organization objectives in finance, program, development, client service, membership, public affairs, government relations, community relations, and any other areas deemed important to the organization.
4. Organizations should consider pilot testing an innovative compensation program on a selected group of staff before introducing it to all staff. More than one innovative compensation program should be considered, especially in larger organizations. The majority of nonprofit organizations in the survey had implemented at least two types of programs.
5. Innovative compensation programs should be well communicated to staff and used as a vehicle to announce the success of employees, teams, and the organization.
Innovative Trends in NonProfit Executive Compensation - To learn more about this author, visit Jennifer Loftus's Website.
Like this article? Share it with your friends
![]() | |
| |
It was direct and well structured
Commented on Innovative Trends in NonProfit Executive Compensation. |
| |
Leave Your Feedback |
|
| |
| |||
Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
|||
Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
![]() | |
![]()
| |
![]() | |
|
| |
![]() | |
|
| |
![]() | |||||||
|
![]() | ||
|
| ||
![]() |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
![]() |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
![]() |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
![]() |
|
|
![]() | ||
|
Top 50 Diversion Blogs
Top Diversion Blogs of 2009 | ||
|
Top Social Business Blogs
Top Social Entrepreneur Blogs | ||
![]() | ||
![]() | ||||
| ||||
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
|
|
|
|
| ||||||||||
|
| ||||||||||











Subscribe to Jennifer's articles











