Nonprofit Pay Increasing
February 1, 2008

The average salary adjustment for staff positions in nonprofit organizations increased by almost 4.0% from 2006 to 2007 according to a new study released by Total Compensation Solutions (TCS) a human resources consulting firm. This shows that salary adjustments in nonprofit organizations are starting to mirror the adjustments made in the for profit sector. It also shows that the nonprofit sector continues to compete for highly qualified employees in the overall U.S. labor force.

The 2007/2008 Not-for-Profit Compensation Survey, conducted by TCS, compiles data on 75 unique positions found in over 449 non-profit organizations located throughout the U.S. TCS also observes a significant change in the way nonprofit organizations pay their employees. In particular, nonprofits are linking pay to individual performance and best practices in the market. This may be a response to increased Federal and state regulation of these organizations that have tax exempt status.

The study reports average pay levels for executives in mission critical and support departments among organizations with operating budgets ranging from Up to $5 Million to Over $50 Million.

The study concludes that nonprofit organizations pay base salaries and total cash compensation that is equivalent to pay in for profit companies. "Once again, we observe that nonprofits need to pay higher salaries in order to effectively compete for executive and staff positions in a highly competitive market place" according to Paul Gavejian, Managing Director of TCS. "They also have to link pay to performance or they risk losing good people to the for profit sector."

In recent years, many non-profit organizations have adopted formal bonus plans for their senior executives. These plans use a variety of performance measures. The bonuses are most often linked with operating budget variances and effectiveness of development activities. "The nonprofits in our study are rewarding executives for achieving strategic and tactical performance objectives" according to Gavejian, "It helps them retain executives who might otherwise be attracted to big pay packages in the for profit world."

Nonprofit organizations are also known to use generous benefits programs to help retain their staff. In the past, employees of nonprofits typically got better health insurance benefits and wellness programs as part of their total rewards. "We observe that there is some moderation of this generosity due in part to significant cost increases in health benefits" according to Gavejian. "If this trend continues, nonprofits may lose a competitive advantage that they've enjoyed over the for profit sector".

The 2007/2008 Not-For-Profit Compensation Survey is the fifth edition of the survey and TCS is proud that it has become a valuable resource for Non-For-Profit organizations and several consulting firms. Copies of the survey are available from TCS (www.Total-comp.com). If you have questions regarding this report, please call TCS offices at (914) 730-7300.

Total Compensation Solutions is a human resources consulting firm dedicated to assisting clients in achieving their strategic compensation objectives. The firm uses market data to identify best practices in a variety of topical areas including: board compensation; executive, middle management and staff compensation; performance management; organization structure; health and welfare; and retirement benefits. With client interaction, TCS gathers and reports information on compensation, personnel practices and benefits and applies the most effective, market-driven solution to each organization's unique set of circumstances. For more information about TCS, visit www.total-comp.com or contact us.

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