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What Factors Influence Non-Profit Pay?

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  • Written By: K. Testa
  • Edited By: Michelle Arevalo
  • Last Modified Date: 18 July 2018
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Many people wonder whether non-profit job salaries are comparable to those in the for-profit world. Non-profit pay is usually determined by a combination of external and internal factors. The external issues often have to do with outside financial influences on the organization. For example, the availability of grants, loans, or donations could each have its own effect on salary ranges. Some internal factors might include the size of the organization, and the roles of its staff members, both of which could potentially influence pay as well.

There are several different categories of non-profit organizations. Some examples include colleges and universities, religious organizations, arts groups, and most community service agencies. Often, the type of organization influences job salaries. For instance, universities and other organizations with large endowments tend to pay more than small charities or public service organizations. It is a common misperception that non-profit jobs equate to low pay. In terms of executive salaries and benefits, some university professors and hospital administrators are among the highest paid professionals in both the non-profit and the for-profit arenas.

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Different types of non-profit organizations usually have varied sources of funding. Some are funded primarily by grants or individual donations. Others might depend heavily on fund-raising events and activities. The type of funds raised, and any attached restrictions, often is involved in determining how much money goes toward non-profit pay. Many grants and donations, for instance, are earmarked for certain purposes. In some cases, the funds are not allowed to be used for staff pay at all.

An organization’s budget is another factor that normally has some bearing on non-profit pay. Typical organizational expenses can include general overhead to run programs, as well as costs for special events and other extras. The total budget usually specifies how funds should be allocated, and what percentage can be dedicated to salaries. In addition to salary, there may be other costs related to staff pay, such as government-mandated benefits. These types of payments usually have to be factored in when calculating employee compensation. In some cases, a portion of the work can be done by volunteers, potentially freeing up some funds to pay salaried staff members.

Another factor influencing non-profit pay could be the roles and responsibilities of the executive director and other key staff members. Applicants for many of these professional positions are often expected to have attained certain levels of education or practical experience. Like in the for-profit world, many non-profit organizations try to attract and retain talented employees by offering them competitive pay and benefits.

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anon947463
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What are the laws regarding the individual income tax for each partner of a tax-exempt LLP?

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