Compensation and Performance in the Nonprofit Sector

Professionals for Nonprofits annual review of nonprofit salaries

Compensation remains one of the most important topics in our sector and for good reason -- the largest budget expense for every nonprofit organization is staff compensation. Just as finding and retaining the right talent is important for an organization's well being, how much that talent costs is critical as well.

In the nonprofit sector, salaries have experienced moderate gains of about 5-6% from 2006 to 2007 and the gains are expected to continue into 2008.

The year 2007 showed us that there continues to be a growing shift in the way nonprofits pay employees. Although traditional compensation plans are still the standard in most nonprofits, organizations have learned that there are many compensation options in addition to the traditional ones. Trends in nonprofit compensation show increases in nontraditional compensation and benefits.

Like for-profits, nonprofits are increasingly tying pay raises to employee performance as well as offering a wide-variety of benefits catered for their staff. Bonuses that used to be a rarity in the nonprofit sector have become more acceptable and more used. Bonus expectations in 2008 are very optimistic. And, while this trend used to be restricted to mid-level management only, it is now spreading to support employees as well.

In addition, it appears that nonprofits are coming to realize that paying more to hire and retain experienced high performing staff and professionals is good business. In year 2008, we project that we will see continued growth in incentive-based compensation as well as a variety of benefit plans that will help nonprofits retain first class talent for the long term.

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by Professionals for Nonprofits