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NonProfit Times: 2009 Salary & Benefits Survey

NonProfit Times: 2009 Salary & Benefits Survey

Entrepreneur

To pay for the increases, Irons said, “We took a really hard look at operating expenses” increasing energy efficiencies with energy grants from local partners to bring green construction aspects, and other more obvious measures, like requiring pre-approval for overtime shifts. Irons emphasized exerting as much control as possible over costs that can be influenced. “No matter how well you manage, some expenses you have to have, but you won’t have much control over,” she said. For instance, regardless of how healthy people are, she said, health benefits still will be subject to what the industry dictates.

Edell said there’s a sense that no one knows what 2009 is going to bring yet. “Obviously, there are doomsday arguments but equal numbers of people—I wouldn’t call them optimistic—but they see a less dramatic impact long-term,” he said.

“Many organizations at this moment are cutting budget, reducing staff, preparing for the worst” Edell said, because they don’t yet know the full impact of government funding cuts, donor cutbacks because of the declining economy or the impact foundations will make as their investments go south.

Despite the uncertainty, Edell expects some hiring will occur, mainly in lower ranges or for replacing executives. “Organizations are still positioned to move forward with critical administrative positions where they know they can’t do without,” Edell said. In particular, organizations are trying to determine how to capitalize on private sector workers now hitting the streets.

—Eddy has seen an up-tick in the number of people willing to work in the nonprofit sector, creating more competition. “We’re seeing an incredible-increase in the number of applications and the type of people who want to work in the nonprofit sector,” Eddy said, something she expects will continue into 2009.

EXECUTIVE DIRECTORS

This year’s highest average salaries were found in the Southwest and West regions for executive directors, at $124,308 and $122,956, respectively. Surprisingly, New England and the Mid-Atlantic had the lowest average salaries for executive directors among the seven regions in the survey, at $110,002 and $106,102, respectively.

Eddy noted that in their searches in Arizona that nonprofits are “willing to pay almost anything because no one really wants to relocate there. They’re willing to go 30 to 40 percent of their original salary range because it’s hard to find good people there.” The nonprofit marketplace is still very young there, she said, because of the incredible growth in recent years.

It looks like it might be a tough year for executive directors regardless of what part of the country their nonprofit is located. Average salaries, while still the highest among all 10 positions surveyed, are expected to decline in four regions led by Mid-Atlantic (-4.9 percent) and South (-3.91 percent), but in the three regions that reported increases (North Central, Southwest, West), none rose by even 1 percent.

Female executive directors outnumbered males this year, but only slightly, with 51 percent, or 805 of the total 1,581 responses compared with 49 percent, or 776 males. Though the average female executive director salary will rise against a drop for the male salary, according to the survey, a female executive director’s salary still will be about 74 percent of a male’s, up from 70 percent.

The overwhelming majority of nonprofits surveyed, more than 73 percent, said they don’t pay performance-related bonuses to top executives. Less than 18 percent of organizations said they pay performance-related bonuses. The proportion was similar when nonprofits were asked: If they had to recruit a new chief executive this year, “would you consider offering a one-time bonus to the right candidate?” Only 16 percent said they would offer a bonus while 43 percent said they would not; 41 percent responded that they don’t know.

Harrigan of Careers In Nonprofits said some associations last year offered signing bonuses but that was in the early part of the year. After July, she said, people were “very apprehensive and not as generous” Year-end bonuses came off the table because employers were apprehensive about what the budget would look like in 2009, she said.

During the past two years, Edell of DRG has seen one-time bonuses offered more often to attract the right person or to address differences in benefits and pensions. Performance-related bonuses for top executives also are becoming more common, particularly at the CEO and development director level, he said, adding that a bonus of 5 to 15 percent of salary can be earned based on predetermined goals and objectives.

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Of the minority of organizations that do pay performance-related bonuses, the chief executive is most likely to get one, and get the largest, with an average of 9.62 percent of their salary. Others more likely to receive performance-related bonuses were program director, 4.88 percent; chief financial officer, 6.23 percent; development director, 6.53 percent; director of human resources, 5.6 percent, and chief of direct marketing, 5.05 percent. Least likely to get bonuses were planned giving officer, 3.43 percent; major gifts officer, 3.59 percent; Web master, 2.18 percent, and director of volunteers, 3.08 percent.

Most respondents, more than 71 percent, don’t offer executives post-retirement benefits other than mandated medical coverage, such as COBRA. Less than 15 percent said they do while 14 percent said they don’t know. Of those that do offer more than what’s mandated, the most popular responses were a simple Individual Retirement Account (IRA) or Simplified Employee Pension (SEP). Some organizations said they offer the same benefits package but the retiree pays the full premium, and others offer the same program as for all employees, with medical, dental and vision.

The most popular benefit offered to executives was professional development education (820 responses), life insurance (787), cell phone (776) and salary increases (716). Less popular were membership dues (529), expense allowance (447), tuition reimbursement (354) and extra vacation (353). The least popular were a performance bonus (248), car (197), severance pay (196), housing (46) and day care services (20).

Among the benefits specified in 267 “other” responses were 35-percent tuition reimbursement for a child, 10.5 percent of annual pay to pension, $3,000 per year for benefits, up to 6 percent match on 403(b) plan, and 0.75 percent of income toward retirement or medical insurance. Another organization said they offer a $50 allowance toward the cost of a cell phone and others offer a transportation or travel allowance. Others specified “The joy of giving!” and “wonderful job, wonderful atmosphere, flexibility.”

Fewer than three of every 10 organizations have an executive succession plan in place, with 71 percent of respondents indicating they don’t. Of the organizations that don’t have a plan in place, almost half (48 percent) said there isn’t one in process. More than 41 percent have a plan in progress and another 4 percent said it’s being considered or discussed.

Miscellaneous comments to the question about executive succession plans elicited perhaps some of the more candid responses, such as, “Not really—they freak when I mention such an idea!” and “No—they hope I never leave” and “No—very scary.” Others indicated they have informal plans but “nothing in writing,” a succession plan has only been mentioned but no action, or it’s slow due to lack of time.

Nonprofits don’t worry enough about talent and future talent, said Edell. If more time and money were spent on the capacity for executive leadership, the transitions “would not be quite as traumatic as they shape up to be,” he said.

About the respondents: The largest category among the respondents was social/welfare, with 28 percent of the total, followed by balanced splits. Health organizations made up 16 percent, followed by other purpose/government, 14 percent, and educational, 13 percent. Next was civic/culture, 10 percent; associations, 6 percent, religious, 5 percent;foundation, 5 percent, and environmental 4 percent.