In other words—by going to this website anyone can find out the salary of the top staff in nearly any nonprofit. Rita Auritt is Manager and Governance Advisor at BoardEffect which is a division of Diligent Corporation. In her role, Rita works with a diverse range of organizations with a focus on healthcare and higher education.
Executive Director Compensation Beyond Salary
- Getting off to an effective early start on the annual budget building process is a must.
- In other words, it’s an estimate of how much money you’ll make and spend over a certain period of time, such as a month or year.
- Cost of living is the market value of goods, such as housing, food and fuel.
- However, salary is not the only thing that a job candidate can negotiate.
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- You can pay yourself a reasonable compensation for services actually rendered.
- Yet, owners of nonprofits can also get paid for running the organizations.
In addition, when deciding on the budgetary allocation of your employees’ salaries, you should factor in the cost of your area, the cost of living, the type of services your nonprofit renders, and the size of your budget. One factor that can significantly impact the personnel expense ratio is the level of volunteer participation within that organization. In other words, organizations with a strong culture of volunteerism should see a much lower personnel expense ratio.
2021 Nonprofit CEO Compensation Study
Having been a board member in many nonprofits and an executive director, Rita understands how BoardEffect’s governance platform can be used to achieve an organization’s mission. Rita worked for many years in financial services and institutional money management. The next significant factor in executive director compensation is benchmarking it with peers in your geographic region. For this, you need data or a loose survey of five or more executive directors of similar-sized organizations in your region.
What is the Average Budget for a Small Nonprofit?
The work that volunteers perform must be in service to the organization’s charitable purpose and not for any commercial venture. A budget is a guide that can help a nonprofit plan for the future as well as assess its current financial health. It is good practice to periodically review the budget as well as compare it to the actual cash flow and expenses, to determine whether they are playing out as expected during the course of the year. For nonprofits with employees, creating the annual budget is usually staff’s responsibility, but board members often review the proposed budget and the full board typically adopts the budget at a full board meeting. The approved budget then serves as a guide for financial activity in the months ahead. Budgets should not be written in stone, because the financial position of the nonprofit may change during the year.
For example, when someone accepts the role of executive director, the assumption is often that salary will go up with merit and cost of living adjustment (COLA). But if an organization is facing financial strain, it may consider reevaluating salaries, which comes with its own consequences! |Whereas, with an employment contract, details like annual raises, performance reviews, and even severance are spelled out in advance.
In other rare cases, the founder or a major donor steps in to be the executive director without compensation. If a major donor is the executive director, the organization may be at risk of failure if the donor leaves. In general, the salaries available for nonprofit jobs will increase as the total assets classification increases.
- For example, I know of a pregnancy help organization that operated exclusively through volunteers from its inception.
- This is one of the areas that seems obvious at first (an executive director runs the organization) but can become an incredible pain point down the road.
- A small nonprofit should not pay the CEO half of its budget, for instance.
- If you never share with your donors how you are spending their money, you risk never getting another donation from them.
- CharityWatch and Charity Navigator also award higher ratings to nonprofits that spend less on overhead.
- Yes, there are organizations like GuideStar and others that produce salary summaries annually and this data is important.
From this labor budget worksheet, a clear picture of salary cost and assigned responsibility areas can be seen. Capacity and expected labor allocations, along with individual and operational performance, can be easily assessed and repositioned. There are advantages to preparing a separate labor budget isolated from the rest of the budget building process. The advantages include providing an accounting services for nonprofit organizations effective early starting point for the budget building process, addressing workforce capacity, resource allocation, and performance issues, and safeguarding confidentiality.
Prioritize Cash Flow Management
Lastly, Nonprofit HR recommends that organizations participate in multiple salary surveys relevant to the nature of their mission and status as a nonprofit. While this can be a time-consuming process, particularly for the first time with a new vendor, completing this step can offer a valuable contribution to the sector. With the understanding that cost of labor continues to be volatile, Nonprofit HR recommends that organizations review market ranges or compensation structures every one to two years to account for new trends in the labor market. Previous guidance given to clients and a good general rule of thumb was to review market ranges or compensation structures at least every three years. However, the pandemic, among other factors, https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ has made markets more unpredictable. Organizations may be tempted to simply apply a percentage increase to their current salary structures.
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