FAQ: Workforce & Compensation
With a payroll exceeding $10 billion and total employment of more than 231,000 people, if it were classified as its own industry, the Georgia nonprofit sector would rank ninth among Georgia sectors in terms of total compensation. In terms of employment, the nonprofit sector would rank 11th behind finance and insurance, but ahead of real estate. For more information about the sector read GCN’s report, Economic Impact of Georgia’s Nonprofit Sector (2012).
For national nonprofit employment data, read Opportunity Knocks’ 2011/2012 Wage and Benefits Report.
Are there recruitment challenges specific to the nonprofit sector?
Nonprofit organizations have traditionally faced challenges in recruiting staff. Perhaps the main challenge is the difference in compensation—salaries in the nonprofit sector generally are thought to be about two-thirds of what commercial businesses pay for comparable work. This differential reduces the pool of available workers from which nonprofits can recruit workers.
Finding people who have an interest in working for nonprofit organizations and who may be better able to absorb the pay differential, however, will not alone meet the human resource needs of the nonprofit sector. Nonprofit organizations typically deal with critical needs and their work demands just as high a level of skill and professionalism as the private sector does.
An additional challenge is the need to recruit individuals who can effectively communicate with or reflect the constituency served in terms of language, ethnicity, and culture.
Finally, a less tangible but real challenge is a largely mistaken image of the work nonprofit organizations do and the people who do that work. On one hand, some observers assume that working for the public good just requires good intentions. On the other hand, many people outside the sector assume that the people who do this work are less skilled than their private sector counterparts. (Otherwise, the thinking goes, wouldn't they be working for more money, if they could?) Different lines of work require different skills and present different challenges in terms of resources available to support workers and the kinds of demands workers face. Skills and work methods that contribute to success in the private sector will not necessarily prove effective in the nonprofit sector.
Fortunately, despite these challenges, there is no shortage of extremely capable individuals who find it rewarding to work in a nonprofit setting. (There is a shortage, however, of resources available to allow nonprofit organizations to take full advantage of the pool of those who are interested, willing and capable.)
Strategies for addressing the challenges of finding talented people who have the requisite social and cultural skills, in addition to analytical skills, and who are interested in or committed to your organization's mission are to:
Clearly articulate the position requirements
Develop relationships with representatives of and institutions in ethnic communities to provide recommendations and posting of job openings
Use targeted methods of recruitment such as Opportunity Knocks, the nation's leading Web site for nonprofit jobs, to identify candidates with an interest in and appreciation of the nonprofit sector.
Reprinted from The Nonprofit Answer Book, Center for Nonprofit Management
Where can I find sample job descriptions?
The Management Assistance Program for Nonprofits provides links to many sample job descriptions, as well as articles on conducting a job analysis as well as effectively outlining tasks, functions and responsibilities for any position. Job descriptions are usually developed by conducting a job analysis, which examines tasks and sequences of tasks necessary to perform the job. The analysis reviews areas of knowledge and skills required by the job.
What questions should be avoided during a job interview?
Questions should not be raised that regard to race, color, sex, national origin, age, if they feel they can report to someone younger, political opinion, religion, disability, illness, disease, hospitalization, physical defect, prescribed drugs, addictions, workers' compensation history, absence from work, arrest record, garnishment records, filed grievances or discrimination claims, languages unless required for the position, what their name "means" or its origins, native language, club membership, organizations, churches unless job related, date of birth, birthplace, marital status, dependents, family plans, physical characteristics, height, weight, where the applicant lives, previous addresses, or photographs.
How do I write an employment rejection letter?
Keep rejection letters brief. The safest explanation is that an applicant was chosen "whose background more closely fit the requirements of the position." Your organization may feel it needs to be a little more explicit; if so, try this explanation: "We have selected a candidate whose combination of experience, skills, training and familiarity with the work we do appears to be an excellent match for our needs at this time. We appreciate your interest in the position and our organization and wish you all the best in your job search."
Having said this, honesty is still the best policy when it comes to employment matters. Furthermore, there are special instances in which a more detailed explanation is necessary. For example, if an applicant for a paid or volunteer position is being rejected because the results of an FBI criminal history background check, the law requires that the applicant be informed of the reason for the rejection and provided with an opportunity to "correct the record" by directly contacting the criminal history records agency.
When an applicant is a volunteer, rejection letters need to be thoughtful. In some cases applicants for volunteer mentoring positions may have undergone a very rigorous screening and interviewing process. It certainly doesn't seem fair in these instances to simply say a "more qualified" person was chosen.
Organizations should be sensitive and explicit. For example, "Because of the vulnerability of our clients, we must be very cautious in matching mentors and mentees. Based on the special needs of the mentees for whom we are seeking mentors, and on a review of your application and interview, I am sorry to inform you that we cannot place you as a mentor at this time."
From Nonprofit Risk Management Center
What are the elements of a compensation package?
Common elements of a compensation package include:
- Base salary
- Insurance policies including life, health, indemnification
- Contribution to pension
- Supplemental benefits
- Reimbursement for education expenses
- Number of employees supervised
- Other benefits, such as car allowance, free parking, housing allowance, etc.
- Sabbatical leave
- Executive expense account
- Employment contract
- Termination clause
- Assessment policy
- Severance package
From Chief Executive Compensation: A Guide for Nonprofit Boards, published by the National Center for Nonprofit Boards
Where can I find information about wage and benefit packages?
When designing compensation packages for the staff and executive director, a nonprofit should endeavor to attract qualified, motivated employees. It can sometimes be difficult to know what combination of wages and benefits will be competitive in today's market.
To help alleviate this problem, Opportunity Knocks conducted a 2011/2012 Nonprofit Wage and Benefit Report collecting national data about staff compensation.
What constitutes excessive pay for a chief executive?
In recent years, excessive executive compensation has become an issue for many nonprofits. Those who believe that the nonprofit sector has become too professionalized and "corporate" cite excessive compensation as an example of how many organizations are losing sight of their mission and their distinctiveness as nonprofits.
Because revelations of inordinately high compensation can erode donor confidence and cause increased public skepticism, board members should pay close attention to compensation decisions. The compensation of the five highest-paid officers or managers of the organization is included on the IRS Form 990, an informational tax form that most nonprofits must file each year.
The 990 is a public document that must be made available by mail or at the organization's office when requested by members of the public - including journalists. For this reason, compensation cannot be considered a private matter, and all board members should be aware of its implications.
The compensation of nonprofit executives usually lags far behind the compensation of leaders in business and government. The real challenge many boards face is not how to reign in excessive compensation but rather how to find the resources to pay appropriate salaries.
To evaluate the appropriateness of executive compensation, consider:
- The size and complexity of the nonprofit.
- The mission area, geographic location and financial condition of the organization.
- The qualifications required for the job.
- Compensation at comparable organizations.
A new wrinkle has been added to the challenge of determining appropriate compensation. In 1996 Congress passed legislation that enables the IRS to impose excise taxes and other penalties on nonprofit executives who are over-compensated.
When determining appropriateness, the IRS evaluates whether the compensation was decided by an independent board, if appropriate comparable compensation data was obtained, and if the basis for determining compensation was documented.
This new power will allow the IRS to penalize individuals receiving more compensation than their positions warrant, rather than resorting to revoke the tax-exempt status of the organizations.
Should a fundraising consultant be paid based on funds raised?
Examples of acceptable compensation include:
- A salary or fee based on expertise, experience or the time requirements of the position.
- A commission for work other than charitable fund raising.
- A graduated fee based on reaching specified milestones in a fund-raising campaign (provided the fee is not a percentage of the charitable funds raised).
Examples of unacceptable compensation include:
- Accepting percentage-based compensation because an organization lacks sufficient budget.
- Disguising compensation as salary, fee or bonus when it is, in truth, a percentage of funds raised.
- Accepting a compensation package in which a part is salary or fee and the balance is to be made up of a percentage of the funds to be raised.
What is the purpose of this compensation practice?
There are two primary principles underlying this standard:
- Charitable giving is a voluntary action for the public benefit.
- The seeking or accepting of charitable gifts should not provide personal inurement to anyone.
The purpose of this standard is to ensure that fund-raising professionals are compensated for their experience, expertise, and the work they actually perform on behalf of the charitable organizations that employ their services, and not for work performed by others, or for funds obtained without effort by the fund raiser, or for funds obtained outside of the mission of their organization. This standard recognizes that fundraising is a continuing practice in which present funds received may be the result of efforts of others in previous years, and current fund-raising activities may result in funds only in the future. Similarly, persons give to causes in which they believe, and sometimes gifts arrive unexpectedly, without solicitation.
What is considered to be incentive compensation?
Incentive compensation is compensation (such as a bonus) that is based on the accomplishment of mutually agreed-upon, pre-established, overall goals related to a fund raiser's responsibilities within his or her organization. Incentive compensation must meet all of the following conditions to be acceptable:
- The organization must have a policy and practice that awards performance-based compensation.
- The policy must have the approval of the organization's governing body.
- The policy and practice must include, but not be limited to, the member's area of responsibility, e.g., be a norm within the organization.
- The criteria must be restricted to mutually agreed-upon, pre-established, overall goals.
- The criteria for determining the eligibility for and amount of such compensation must exclude any consideration of a percentage of charitable contributions as defined by, and subject to, government regulations, or as reported on government reporting forms as "contributions, gifts, grants, and similar amounts received." This exclusion should be interpreted as an absolute prohibition of any reference to, or use of, a percentage of charitable contributions to determine compensation, either in effect or actuality.
How is incentive compensation different from percentage compensation?
Incentive compensation is based on the achievement of mutually agreed-upon, preexistent goals related to the fund raiser's responsibilities (and must meet all of the conditions described above), whereas percentage compensation is compensation that is computed purely as a percentage of charitable contributions obtained.
What does it mean to be within the prevailing practice of an organization?
This means that the practice of awarding bonuses or other incentive compensation for achieving mutually agreed-upon, preexistent objectives related to one's responsibilities must apply to all or most executive positions within the organization and not simply to members of the development staff alone.
Reprinted from the Association of Fundraising Professionals
How can our organization handle employee fear or low morale?
Coping with Employee Fear and Low Morale
In the weeks and months following a major disaster or traumatic event, employers in government entities and nonprofit organizations discover unprecedented levels of fear and concern on the part of staff. The evidence manifests itself in many ways. People with perfect attendance records call in sick at record levels, seriously impairing the organization’s ability to deliver services and meet client needs.
In other instances, productivity levels hit rock bottom due to a general sense of disquiet and a need to talk about what happened. The world, as these people know it, has been shaken and they don’t feel safe or secure.
If the disaster adversely affects the economy (cash flow, sales, donations, tax revenues, emergency spending), employees may be cut back or laid off, expansion or improvement plans may be shelved, and the entity or nonprofit organization may be fighting for its life. Any of these measures will exacerbate staff morale and fear, which is already heightened by the traumatic event.
The following paragraphs offer suggestions for how an entity or nonprofit organization might try to cope with these risks. Each of you will need to consider and tailor your response according to your unique circumstances: mission, nature of services or products, magnitude of the problem facing your organization, and the resources available to address the issue.
How can employers address fear and low morale following a disaster or traumatic experience?
Understand that employees need time to heal. The time it takes each person to return to normalcy depends on the degree of intensity and loss, that person’s ability to copy with emotionally difficult situations and how many other stressful events preceded the traumatic experience. As a supervisor or employer, you can:
- Cut them some slack. Within reason, consider working with, around or through missed deadlines, lapses in productivity and errors.
- Lighten up any restrictive office rules to facilitate healing. You might look at your dress code; policies concerning children in the office and personal phone calls; and grant time-off to deal with family matters.
- Be truthful about job security. If their jobs are secure, tell them. If they could be laid off, give them as much information as you are able, provide them with on-the-job time to seek new employment, refer them to outplacement resources in the community, and find out if “sister” organizations are hiring.
- Encourage employees to acknowledge and talk about their fears as part of the healing process. Keep an open door, provide information about employee assistance programs, and put together a list of community resources where you can refer employees or they can seek help on their own.
- Help employees feel safe at work. Start by re-educating them about security and emergency procedures. Provide short and simple, bullet-pointed lists of procedures for opening mail, answering the door, recording phoned-in threats, parking in well-lit areas, working alone and driving on the entity’s or nonprofit organization’s business.
- Create situations where people can naturally bond and provide each other support. Hold regular staff meetings, develop project teams, and develop special committees to address specific challenges facing the organization.
- Be aware of signs that indicate employees need professional help. Some of these signs are isolation; irritability; dramatic mood swings; prolonged lethargy, tearfulness or depression; and references to or talk of suicide or ending it all.
- Encourage employees to take positive action to help them heal. Provide suggestions about how individuals can contribute in the aftermath of a disaster or adverse events, such as by organizing or participating in a blood drive or fund raiser for victim relief, or helping victims rebuild their homes and lives.
How do people who experience or witness a traumatic situation react?
Normal reactions to abnormal situations include:
- loss of control
- shattered sense of security
- emotional numbness
When should individuals who have witnessed or been involved in a disaster or other traumatic experience seek professional help?
If individuals feel that they are unable to regain control of their lives or experience any of the following symptoms for more than one month, they should consider seeking outside professional mental health assistance. According to the American Psychological Association, these symptoms include:
- Recurring thoughts or nightmares about the incident.
- Sleeplessness or change of appetite.
- Having memory lapses, especially with aspects of the trauma.
- Difficulty concentrating or making decisions; feeling scattered.
- Feeling anxious or fearful, especially when sounds or smells recall the incident.
- Feeling on-edge, easily startled or overly alert.
- Feeling depressed or sad, or having low or no energy.
- Feeling irritable, easily agitated, or angry and resentful.
- Feeling emotionally numb, withdrawn, disconnected or different from others.
- Feeling a sense of emptiness, despair or hopelessness about the future.
- Feeling guilty about having survived— or not having done enough to prevent - the incident.
- Isolating themselves from others.
- Being overly protective of their own and their families’ safety.
- Experiencing increased conflict with family members.
- Being tearful or crying for no apparent reason.
How can an organization help restore normalcy and security following a disaster or other traumatic experience?
Both shock and denial are normal responses to disaster and other kinds of trauma. These protective reactions may leave people feeling stunned and temporarily numb. They may feel disconnected with life. There isn’t one standard timeframe for reaction and recovery, but there are some standard constructive steps individuals can take to help them return to a sense of normalcy. Encourage your staff to:
- Give themselves time to heal—be their own best friends; let them acknowledge their emotions.
- Avoid using alcohol and drugs to block the pain.
- Focus on the things in their lives that they can control—how they treat other people; not being riled by the unimportant; setting limits; taking time out; choosing to play; and finding small ways to help others.
- Limit their exposure to media coverage of the event(s).
- Maintain connections with their communities, friends, relatives, neighbors and co-workers.
- Ask for support from people who care about them, will listen to them and empathize with them, or inquire about local support groups that are led by trained and experienced professionals.
- Eat well-balanced meals, and get plenty of rest and exercise to strengthen their ability to handle stress.
- Establish or re-establish routines: mealtimes, bedtimes, exercise regimen.
- Avoid major life decisions, which are highly stressful.
- Learn what to expect as the result of trauma; go to the library, or surf the Internet under “coping + disaster” or “disaster + mental + health.”
- Think about things that give them hope.
From the Nonprofit Risk Management Center