Building Equity in Nonprofits? Start with Pay.
If the global pandemic has taught us anything about work, then it is the vital need for consistent and sustainable income. Millions of Americans have suffered pay cuts, furloughs, and even long-term unemployment this year. Nonprofits, who serve as a main help line to our most marginalized communities, have endured programming cancellations, employee cutbacks, fundraising deficits, and even total loss of business.
While nonprofits reorganize and find new ways to work and serve, funders have the opportunity to insert life into the bloodline of a nonprofit – the employees. Revenue generation and expense management are helpful tools in this time of great financial struggle, yet retaining and motivating employees is equal in priority. A loyal employee is a great asset. Studies have shown that employee engagement leads to higher productivity and increased business profits.
In addition to employee engagement, pay for employees addresses nonprofit challenges with equity, specifically pay equity. When one reviews nonprofit salaries provided by the Bureau of Labor Statistics, the data is deceiving at first glance. The data shows that nonprofits compete at the same level or even higher with for-profit companies. However, once you start looking below the surface, you see startling differences.
· The US has a documented wage gap history between gender identities. Over 70% of the nonprofit workforce is women; therefore, the overall gender pay disparity impacts nonprofits.
· The US also has a documented wage gap history between white people and people of color. A notable racial leadership gap exists within nonprofits. Ninety percent of nonprofit CEOs are white.
· The growing US wage stagnation is also affecting nonprofit pay. Nonprofits employ a strong portion of part-time positions and/or full-time positions with no benefits like health insurance.
· The US cost of living continues to increase despite the growing wage stagnation. The difference between a year-round, full-time job paying $15 per hour and the US annual expenses for basic necessities is $20,705.
What does this mean for nonprofits? It means that many of the people who help our most marginalized communities are facing the marginalization of poverty due to lower wages.
Whether you are a nonprofit board member, a foundation leader, or individual donor, I encourage you to address equity with a talent investment strategy. Nonprofit talent investment is a movement to change foundation giving patterns from a programs and capital focus to a pro-talent culture. Rusty Stahl, Founder, President & CEO of Fund the People, notes that stabilizing and even increasing nonprofit capacity includes a concentrated strategy of employee engagement at all levels, not just the Executive Director or leadership team.
A donor-funded talent investment strategy includes giving money for employee recruitment, development & retention, and retirement & transition. Certainly, giving money for a leadership development program for the top executives is helpful, but have you considered if the nonprofit is able to pay a living wage to all employees first? A training class around equipment safety is amazing, but does the nonprofit have the ability for everyone to attend without business grinding to a halt? Encouraging a nonprofit to provide a retirement plan for employees is important, but have you considered how to help the employees understand the importance of using that plan?
I recently completed action research at a nonprofit that implemented a talent investment strategy with new funding. The nonprofit focused on pay levels and structural changes for all employees, not just leaders. The implementation plan for talent investment included three guidelines:
1. Raise employee pay to living wages
2. Align staff capacity with organizational needs
3. Redesign of internal workflow
After a year of completing this work, the nonprofit experienced increases in overall employee satisfaction with the greatest gains linked to satisfaction with pay & benefits and supervisor support. Non-supervisor employees shared that they equated living wages with covering basic necessities, such as housing, health care, and food. When asked how much pay they needed to be satisfied, these same employees stated that “they just wanted enough to get by.” Supervisors were interviewed as well, and they came back with the same definitions of pay.
The pay equity in this nonprofit changed because the entry pay level was much closer to a Living Wage Certification. This nonprofit’s entry pay level was higher than other local businesses, but this higher pay level addressed the cost of living realities in that geographic location. The nonprofit also changed how salary bands were determined. Rather than just using nonprofit salary reports, which compare nonprofits against each other, the nonprofit began to track the local cost of living data as a baseline for salary bands. This change allowed the nonprofit to open up their candidate pool for new positions and retain current employees with pay that paralleled the cost of living for people in different life situations, such as married with kids, high student loan debt, and nearing retirement.
What are you doing to build equity in your nonprofit? If you ask me, then I recommend starting with pay. Your current and future employees will thank you.