Nonprofit Compensation Between 2015 and 2019: How Things Have Changed

According to a 2021 report by Candid (based on tax filings for over 100,000 nonprofits in 2019), salaries for chief executive officers (CEOs) and executive directors (EDs) in the charitable sector increased steadily between 2015 and 2019.

When it comes to nonprofits, executive compensation isn’t just about attracting top talent; it’s also a compliance issue. The IRS (Internal Revenue Service) requires organizations in this sector to employ a systematic and evidence-based approach to determine reasonable salaries for their top directors/managers.

Here are the highlights of the Candid report on nonprofit compensation between 2015 and 2019.

• Median Nonprofit Executive Salaries and Benefits Rise Steadily

According to the study, the median pay for nonprofit executive employees increased steadily over the five years. Compensation rose from $106,000 in 2015 to $121,000 in 2019, across fourteen categories of executive positions.

However, on average, CEOs and EDs for the majority of the 501(c)(3) organizations earned less in 2019 than in 2018. Nonprofits with a budget of $50 million and above and those with a maximum budget of $250,000 did not experience any decline in executive compensation over the 12-month period.

• Gender Pay Gap for CEOs/EDs Still Evident Across the Sector

Over the years, organizations across all industries have been striving to not only provide equal employment opportunities but also narrow the gender pay gap. The charitable sector is no exception, based on the latest findings by Candid.

The report shows that female CEOs and EDs in 501(c)(3) organizations are yet to reach parity with their male counterparts in terms of earnings. Nonetheless, the pay gap has been gradually closing since 2005 across all budget categories.

There’s still room for improvement in the sector, with female CEOs earning less than their male peers.  It appears that larger nonprofits lag behind the smaller ones in this aspect as they have a wider gender pay gap for their CEOs/EDs.

In organizations with budgets of $250,000 or less, female executives earned 94 cents for every dollar their male counterparts made over the study period. On the other hand, women CEOs or EDs earned 80 cents for every dollar paid to their male peers at nonprofits with a budget of $50 million or higher.

Besides getting closer to plugging the gender pay disparity, smaller nonprofits with a maximum budget of $2.5 million filled their executive positions with more women than men.

• Executives at Science and Tech-related Organizations Earned the Highest Pay

The analysts at Candid also compared executive compensation across different types of nonprofits. If paying higher salaries means attracting the best talent In the market, then science and technology-focused nonprofits remain the most competitive in this area. These institutions had a median executive pay of $196,000, the highest in the charitable sector.

The reported CEO/ED compensation for nonprofits in other industries is as follows:

• Health ($189,000)
• Medical research ($188,000)
• Religious institutions ($65,000)
• Animal-related nonprofits ($86,000)
• Arts organizations ($92,000)

Northeastern Nonprofits Have the Highest Median Executive Pay

CEOs at 501(c)(3) organizations in Northeastern states had the highest median compensation in 2019, according to this study. At the state level, the District of Columbia led the way in executive pay rates.

Here’s a look at the reported median executive pay by region for nonprofits across all budget sizes in 2019:

• Northeast ($137,000)
• The District of Columbia ($174,000)
• New York ($152,000)
• Massachusetts ($143,000)

If you operate a nonprofit, comparable executive pay and benefits data across the sector can help you set a compliant compensation scheme.

Are you looking for a consulting firm for salary, legal, and other human resources issues? Contact the professionals at McKnight Associates, Inc. We are ready to offer you hands-on human resources consulting for colleges, universities, medical centers, and organizations of all sizes.