Recently, I came across this comment on a Huffington Post article about nonprofit salaries:<\/p>\n
\u201cHere\u2019s why I don’t donate to non-profits. There is no legal cap to the salaries paid to executives. Really? Do y’all think I donated to feed the pig CEO, or the needy? See a poor person in the street, give them the money. They may buy a bottle, but at least they will see the money, with no strings attached.\u201d<\/em><\/p>\n At some level, he has a point.<\/p>\n If the goal of a nonprofit is to solve a societal problem, shouldn\u2019t as much money as possible go directly to the people being helped? Isn\u2019t it true that every dollar paid to the \u201cpig\u201d CEO is a dollar pulled away from achieving the mission?<\/p>\n It\u2019s exactly this commenter\u2019s attitude that makes nonprofits frightened about \u201coverhead.\u201d I\u2019ve written before about whether nonprofit overhead is too high<\/a>. Today I want to explore something a bit more specific.<\/p>\n Is it inappropriate for nonprofit leaders to be well paid? And how can nonprofits \u2013 especially smaller ones that don\u2019t have big budgets — navigate this dilemma?<\/p>\n As you may know, in the years before I started Joan Garry Consulting, I served as the Executive Director at GLAAD<\/a>, a mid-size gay rights nonprofit.<\/p>\n During my tenure, a leading publication conducted an annual survey of the salaries of executive directors in our particular sector. My colleagues and I dreaded the day this article hit the newsstand every year.<\/p>\n Why?<\/p>\n No one wanted to be at the top of the list.<\/p>\n Hit the top and you became a target. Your board starts asking questions about comparable compensation and folks in general just start making comments \u2013 and not of the \u201cyou\u2019re worth every penny\u201d variety.<\/p>\n I call this phenomenon \u201csalary angst.\u201d<\/p>\n Salary angst doesn\u2019t happen in the private sector. CEOs fight for the honor<\/em> of making the biggest salary. Right or wrong, it\u2019s considered a measure of effectiveness. It means you\u2019re a good negotiator. Companies fall over themselves to pay more money to attract the candidates they consider the best.<\/p>\n Not remotely so in the nonprofit sector.<\/p>\n One year I hit the #1 spot on the salary survey. Ugh. Salary angst.<\/p>\n What made this even worse was that GLAAD wasn\u2019t the largest organization in the movement. Why should I be making so much money? Never mind that it was a major pay cut from what I made in the private sector before I came aboard.<\/p>\n I found myself having to justify being well compensated. It made no difference that I had been, by many measures, an effective leader, manager, strategist, public voice, and movement leader.<\/p>\n While I no longer work as an executive director, I sure do work with a lot of them. Some of them feel a sense of guilt at making a semi-reasonable salary. Others resent making so little. But for most of them, their salary isn\u2019t something they feel particularly good about. They have serious salary angst.<\/p>\n This has big consequences.<\/p>\n Nonprofits exist in a free market. They need to be competitive in order to attract the best talent.<\/strong><\/p>\n It\u2019s that simple.<\/p>\n Big companies pay big bucks.<\/p>\n Startups attract outstanding leaders by offering company shares that can eventually make the CEO very rich.<\/p>\n Strong leadership is not just important for a nonprofit \u2013 it\u2019s absolutely critical. This person is the voice and face of your organization. The strategist. The visionary. The lead fundraiser. The advocate. A leader in your sector.<\/p>\n Without strong leadership, nonprofits die.<\/strong><\/p>\n So no \u2013 it\u2019s not<\/em> true that every dollar paid to the \u201cpig\u201d CEO is a dollar pulled away from achieving the mission. To the contrary, a healthy nonprofit with outstanding leadership will be able to help more people in a more effective and bigger way for a much longer time. They achieve their missions faster.<\/em><\/p>\n When a terrific leader from the private sector is considering a position at a nonprofit, there\u2019s only so much of a pay cut she\u2019s usually willing to take. Yes, it\u2019s an opportunity to do good in the world\u2026 to make a real difference\u2026 and that has serious value all by itself. But that doesn\u2019t put her kids through college. And there are plenty of ways to do good in the world while working in the private sector and making a lot more money.<\/p>\n Do you see how short sighted nonprofits shoot themselves in the foot by not paying competitive salaries to their top leaders?<\/p>\n Boards that overly focus on reducing overhead at the cost of not attracting the very best available leadership tend to screw up contract discussions. This is a great way to make the leader feel the salary angst. It\u2019s also the fast lane to a leadership exit.<\/p>\n For example:<\/p>\n Here\u2019s the dilemma. It\u2019s all well and good to say that nonprofits need to pay competitive salaries. Perhaps you\u2019re thinking, \u201cI\u2019m sure a UNICEF or Red Cross can afford to do that. But I work at a 6-person nonprofit with less than a million dollars in revenues. Do you actually expect us to pay 25% of our total budget to the Executive Director?\u201d<\/em><\/p>\n It\u2019s true. Smaller organizations may not be able to compensate their EDs as well as they deserve. There are hundreds of thousands of 501c3 organizations in the US with budgets under $500,000.<\/p>\n Private sector startups without much or any revenue handle this by offering stock options. That\u2019s not something nonprofits can do.<\/p>\n But what you can<\/em> do is make the ED feel<\/em> like a million bucks. At the end of the day, it\u2019s the combination of a reasonable wage and solid value and appreciation that will fire up an ED to deliver a five-star performance.<\/p>\n Here are 8 things smaller nonprofits can do to make their EDs feel valued, especially if they\u2019re not in a position to offer competitive salaries.<\/p>\n To all of you who sit on a board, a search committee. To search firms. To EDs who are timid about salary negotiations.<\/p>\n To everyone in the nonprofit world who has salary angst.<\/p>\n Let\u2019s revisit the comment I mentioned at the beginning.<\/p>\n \u201cHere\u2019s why I don’t donate to non-profits. There is no legal cap to the salaries paid to executives. Really? Do y’all think I donated to feed the pig CEO, or the needy? See a poor person in the street, give them the money. They may buy a bottle, but at least they will see the money, with no strings attached.<\/em>\u00a0<\/em><\/p>\n This is what we are up against.<\/p>\n If you are a board member and feel even the slightest bit of this, it is time for a serious attitude adjustment.<\/p>\n Think of it this way. As a board member, you are an \u2018owner\u2019 of the enterprise. The success of all of you is dependent on the folks at the top and their ability to deliver on the promise. Whether you run a tiny, mid sized or large organization.<\/p>\n Please start thinking that way. Put yourselves in the shoes of your current leader and remember:<\/p>\n Your leader is outstanding. He has plenty of other options. And the joy and privilege of service is actually NOT priceless.<\/p>\n","protected":false},"excerpt":{"rendered":" Is it appropriate for nonprofit leaders to be well paid? Why or why not? And what about at smaller nonprofits that don’t have big budgets?<\/p>\n","protected":false},"author":4,"featured_media":584467,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[16,34],"tags":[],"class_list":["post-584465","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ceo","category-succession-planning"],"acf":[],"yoast_head":"\nI WAS ONCE A WELL PAID NONPROFIT EXECUTIVE DIRECTOR<\/h2>\n
THE CONSEQUENCES OF EXECUTIVE DIRECTOR SALARY ANGST<\/h2>\n
6 WAYS NONPROFITS MAKE THEIR LEADERS FEEL SALARY ANGST<\/h2>\n
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HOW CAN SMALLER NONPROFITS DEAL WITH SALARY ANGST?<\/h2>\n
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A FINAL THOUGHT<\/h2>\n