Myth Busting: Nonprofit executive salaries

by Jamie Millard
follow me on Twitter: @jjmillard

Most young nonprofit professionals are not yet executive directors, but the policies and attitudes around nonprofit executive salaries already affect us. Negative perceptions and underpaid talent devalue our entire sector and make it an undesirable place to devote one’s career.

Recent data from the 2011 Daring to Lead report supports the sentiment that most executives are underpaid: the median nonprofit CEO salary falls between $50,000 and $75,000 a year, an average of 20–40 percent less than his or her foundation/government/business sector counterpart.

At the same time, there’s an unhealthy obsession outside the sector about nonprofit salaries. The Trust and Charitable Giving in Minnesota survey conducted by the Charities Review Council in 2007 reports that almost half of the Minnesotans surveyed believe nonprofit staff should make less than their for-profit counterparts. Media exposés often ask “how much is too much?” for a nonprofit executive director to make, focusing on rare cases of overpay.

It’s time to bust the myth that paying for salary hurts a nonprofit’s potential to provide more services or detracts from important programs. Moving public perception requires each of us to step up when we hear these sentiments from strangers, friends, and family.

MYTH: “I don’t want my donations paying for nonprofit executives’ salaries.”

BUSTED: Yes, it’s important for a nonprofit to efficiently and effectively use funds to achieve its mission, but the most crucial aspect of that is hiring experienced, competent staff to oversee and implement the organization’s programs. Expecting a donation to be effective without going toward salary is naïve. While 65 percent of a donation might go toward a nonprofit’s programs, the other 35 percent going toward administration and fundraising is critical for an organization to best fulfill its mission and be sustainable.

MYTH: “Nonprofits should be run by volunteers after they retire from the for-profit sector.”

BUSTED: It’s surprisingly common to find individuals who believe execuitve directors should work for less than their for-profit counterparts—or even for free. These opinions are rooted in the misconception that nonprofits are not businesses worthy of paid staff. Leading a nonprofit isn’t a hobby. It’s a real job with real responsibilities, like managing a 10 million dollar operating budget and overseeing dozens or hundreds of staff. Nonprofits are important economic engines that require competent, experienced leaders with market-sensitive pay.

MYTH: “If a nonprofit CEO gets a big salary, then not as many needed services will be provided.”

BUSTED: Nonprofits produce a social return—a return that benefits our communities. Most wouldn’t blink an eye at a for-profit trying to hire the best CEO it can find, at the most competitive salary it can afford, in exchange for the CEO leading the company to increased profits. Why should a nonprofit be any different? Is the importance of social return and betterment of our communities less critical than monetary return? (Not to mention the real monetary impact improved communities have on our society.) If a board of directors is able to hire the best executive director with aggressive compensation, and they produce an increase in financial and social profit for the organization, then it was well worth the investment.

As my own executive director says, “We all benefit when good leaders are attracted to oversee nonprofits that improve the lives of individuals and the community.” Instances of overpay are bad, but underpay is the chronic condition holding the nonprofit sector back. By confronting these misconceptions head-on, young nonprofit professionals can strengthen the value and respect of our sector.

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Sunshine and Showers: The highlight reel

Intro by Nathan Magel (@nathanmagel)
Video by Chris Oien (@coien) 

“I have no idea what I’m doing.”

It was a thought that sat right smack in the front of my 19-year-old mind as I, a credulous improv comedy “actor," woodenly blurped random sequences of words to the blank, slightly pitying faces of the audience before me. Needless to say, I am no longer an improv comedy actor. And needless to say, it can be tough to know what to do when you don’t know what to expect next.

Lucky for me and more than sixty YNPNers facing a dour and uncertain 2012, last Friday’s Nonprofit Forecast event was both portent and panacea as the sage words of Sheila Smith (Executive Director of Minnesota Citizens for the Arts) and Marcia Avner (Senior Fellow at the Minnesota Council of Nonprofits) were unpacked and reimagined through the art of improv by the fine fellows of the Theater of Public Policy.

Cited as one of YNPN-TC’s best events ever by a number of folks, you were a fool to miss the show. But you can recoup by catching the highlights below! Would that my 19-year-old self only have had such a chance.

Confessions of a new board chair

by Julia Jackson

Can I be honest? Sometimes a new leadership opportunity doesn’t feel like a thrilling adventure, or a great next step in your career path. Sometimes it doesn’t feel like a long-awaited chance to use your skills.

Sometimes it feels just, well, scary.

Maybe it’s unexpected. Maybe you don’t feel prepared. But there you find yourself and you have a choice. Say no, or face your fears and accept the challenge.

A few months after joining the board of directors at Rainbow Rumpus. I was asked to be board chair. I said no. I must not have been very convincing because they asked again. This time, I said I’d think about it.

Let’s face it—I was afraid.

I have been afraid many times in my life. Anyone that knows me will not be surprised to hear I am not an adrenaline junky. I tend to be a planner and take calculated risks. From time to time I decide to trust the encouragement of those around me, swallow my fear, and move forward with something that really scares me. So, that’s what I did. I swallowed my fear, doubts, and insecurities and became chair of the board last spring. 

I thought I’d share with you what scared me the most about taking on this new role and how I’ve faced those fears in the past eight months. 

The sources of my fears:

• I’m an introvert. Can an introvert be a board chair? Can an introvert be a leader? Of course. But certain aspects of the role were very intimidating. I am fairly comfortable facilitating small group discussions, so leading board meetings felt like something I could handle. Public speaking—now that is scary. The thought of being a public face of the organization, expected to speak at events, made my stomach churn.
• Asking for money. Okay, now couple being an introvert with having to ask strangers for money, potentially in front of large groups of people. I often find meeting and talking to new people exhausting. I wouldn’t call myself socially awkward, correct me if I’m wrong here, but let’s just say I’m still refining the art and joy of small talk. And I happened to have zero experience asking people for money. Gulp.
• Knowing it all. You are supposed to “know it all” when you are board chair, right? You’re supposed to sweep in and take action, bettering things left and right. At least, it seemed you were supposed to know more than I did. This is my first board experience, and I had been on the board for less than a year. People would be turning to me and counting on me. What if I let them down?

 How I continue to face my fears:

• Trusting my support network. I have learned to trust that people are often asking and encouraging me to take on new challenges for a reason. Perhaps they see something in me I don’t see, or are just encouraging my professional growth. Either way, I am learning to trust them and so far I have not been led astray. My decisions to go to graduate school, become a nonprofit consultant, and join a nonprofit board were all carefully weighed and considered by me after receiving encouragement from people I trust. These are the same people I then turn to when I need advice.
• Making room for other leaders. I don’t want to, and don’t think I have to, lead alone. By helping to identify and build the leadership capacity of every other member of the board of directors, I not only help others to grow, but I help ensure sustainability of leadership in the organization. I am a strong leader in some ways. I am thoughtful and organized. I can keep us on track and am able to bring everyone into the conversation. Others on my board help us expand the conversation to big picture thinking, or ask strategic questions in areas where I am not an expert. They have even stepped up to do a lot of public speaking for the organization. We fill in each other’s blind spots and make up for each other’s weaknesses.
• Doing things differently. Sometimes I am able to find creative ways of fulfilling my duties that feel right for me. This has been especially true when fulfilling my fundraising duties. When asked to host a fundraiser I asked another board member to co-host it with me. It ended up being both fun and successful. I still had to speak in front of everyone but I survived. For Give to the Max Day, I happily took a dorky picture of myself in my pajamas to help with our fundraising campaign. Thank you phone calls to donors…. Well, I’ve had to just commit to doing that one. But I talk about my nervousness at board meetings and together we have made sure everyone has the support they need. Let me tell you, the phone calls just get easier with practice.
• Being honest. I have decided it’s easier to be honest with my fellow board members. I don’t pretend to be fearless, or heroic, or an expert in everything. I tell them what I know and don’t know. I ask them for input or help when I’m not sure what step to take next. I’m honest about what scares me and when I’m willing to just do it anyway. I’m willing to step up to the task or make room for others when it’s needed. As a leader, I work with my strengths and try to find support for my weaknesses—and I try to do the same for others.

Fear is not necessarily a rational emotion. Some of my fears are not founded, or really come from my own expectations rather than those of others. But owning up to what I’m afraid of, knowing the ways I’m going to seek support, and reflecting on past challenges helps me move forward despite my fears, rational or not.

Have you ever been asked to take on a new role that scared you? What scared you the most about this new challenge? How did you work through your fears?

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Nonprofits are ready to take the plunge

Adaobi Okolue brings up some excellent points as to why the nonprofit sector may resist innovation. After attending the same workshop, I was ready to stand 100% behind her post. That is, until I attended a staff development meeting on adaptive leadership. Innovation demands new strategies and adaptive leadership (leading through challenges) to mobilize these new ideas.

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Blowing up the box: YNPN-TC's three year strategic plan

Have you heard? The Young Nonprofit Professionals Network is one of the nonprofits to watch in 2012, according to the Chronicle of Philanthropy. Here in the Twin Cities, we hope you’ll be watching (and participating or helping) as we roll out our three year strategic plan. This plan has been in the works since this summer when the YNPN-TC Board gathered for a series of retreats to contemplate how to most strategically provide and promote opportunities for the development of young nonprofit professionals and bring our vision closer to our reach.

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