We all have that friend—let’s call him Diego—who has changed jobs so many times he has to consult his LinkedIn profile for a refresher prior to an interview. Diego has used his experience at different companies to build a variety of skills, move into positions of increasing responsibility, and boost his salary to a higher level than his more loyal peers. While this sort of job hopping may be endemic in the ladder-climbing corporate world, it is widely assumed that those in the nonprofit sector, motivated by something loftier than a paycheck or job title, will stick around longer to advance their organization’s mission and see their work bear fruit. However, recent trends paint a different picture: that of a nonprofit job market that is increasingly fluid in nature.
Last year, we touched upon the topic of nonprofit staff shortages caused by rising inflation, and data point to a continuation of these trends. As of mid-2022, the National Council of Nonprofits found that three quarters of organizations had a job vacancy rate of 10%, while four out of ten had a vacancy rate of over 25%.
Staff resignations have contributed greatly to these shortages. A report by Nonprofit HR on talent retention found that social impact organizations had a 20% voluntary turnover rate in 2021, up from 11% the year before. Why did so many employees choose to leave their jobs? The top cited reason was a better opportunity (57%), followed by compensation and benefits (46%), and a lack of opportunity for upward mobility and career growth (43%).
Based on these statistics, it could be surmised that, not seeing a clear path to salary and professional growth within their own organizations, many nonprofit employees have decided to take Diego’s path and look elsewhere to advance their careers. In the midst of plentiful jobs and rising inflation, some have fled to the more lucrative private sector, further fueling labor shortages in nonprofits.
A recent study of U.S. fundraisers found that one in five intended to leave their organization in the next year, and in terms of job tenure, “of the tested variables, salary consistently had the largest effects and was the most significant.”
Fundraisers are certainly in high demand, so top producers are likely to be lured by organizations offering better compensation. In 2021, many nonprofits boosted salaries in order to fill open fundraising positions. Despite a cooling job market, even those fundraisers planning to stay at the same organizations anticipated earning more in the following year.
But many nonprofits find themselves constrained by a number of factors which prevent them from raising salaries. Inflation has caused not only costs to rise, but also demand for services, as households struggling to secure basic necessities turn to nonprofits for help. In addition, the expiration of the universal charitable tax deduction and reimbursement limits for government grants and contracts have reduced potential revenue for nonprofits.
Apart from salary concerns, some think that the very nature of nonprofit work is causing people to resign. Writing for Forbes, Sarah Evans argues, “The Great Resignation is hitting the nonprofit sector in potentially catastrophic ways, and most significantly in leadership roles. Why? Because many were already underpaid, swimming upstream against a broken structure, tackling soul-crushing issues and now feel hopeless to make the change they thought they could when they started.”
These are difficult issues to contend with, no doubt, but if salary is a deciding factor in whether to stay at an organization, the current move towards greater wage transparency may exacerbate fluidity in the nonprofit job market in the coming year.
Sites like Glassdoor and research such as the Nonprofit Organizations Salary and Benefits Report have long empowered job hunters with important salary information for their sector and job title. Now, a wave of legislation requiring salary ranges to be included in job ads promises to bring even greater transparency to the job seeking process.
California, Colorado, Washington State, and New York City have already passed such laws, allowing curious individuals to glimpse salary ranges for similar positions at other organizations, as well as their own. Compliance with these new laws has been somewhat mixed, with some organizations still choosing not to disclose salary information and others publishing extremely wide ranges that make it difficult to discern what the position actually pays.
In general, though, those located in these areas now have a much clearer idea of where they stand in terms of compensation, and employees earning below industry standards may choose to job hop. As many organizations have raised wages in recent months to fill posts, this has the potential to create friction between management and existing employees, who may find that new hires are coming in at a salary higher than their own. From the employee’s standpoint, having access to this type of information provides the leverage needed to ask for a raise. For executive directors at cash-strapped nonprofits, this may only add to financial stressors.
Looking at the big picture, increased salary transparency may offer a path toward achieving greater pay equity for women and diverse populations, a movement in which many in the nonprofit world are actively involved.
One effort to raise awareness of these issues is Equal Pay Day, which is “the symbolic day each calendar year when a woman’s earnings ‘catch up’ to a man’s earnings from the previous year.” In 2022, this day fell on March 15, and was even later when looking at Black women (September 22), Native and Indigenous women (November 30), and Hispanic or Latina women (December 8).
Vu Le of Nonprofit AF has long argued that a lack of pay transparency contributes to such disparities, publishing articles such as “When You Don’t Disclose Salary Range on a Job Posting, a Unicorn Loses Its Wings,” and “Not Showing the Salary Range in Job Postings is Archaic and Inequitable. So Why Do We Keep Doing It?” In the latter article, he points out that “there is so much research now showing that not disclosing salary information increases the gender and racial wage gaps as well as wastes everyone’s time. If organizations want to walk the talk on equity, diversity, and inclusion, then disclosing salary is a quick, tangible, and relatively easy action to take.”
Salary information is more widely available than ever and job openings are abundant, making the current landscape a job seekers market. For the Diegos of the nonprofit world searching for their next opportunity, this is certainly welcome news.
Organizations looking to retain top talent may need to up their game in the salary department or employ creative strategies to entice people to stay.