What Should You Pay Nonprofit Executives?

One of the facts of life is that business executives are rewarded handsomely for their work. Whether or not you think their compensation is fair is besides the point.

Executive compensation is always going to be a hot topic, but it is even more scrutinized at nonprofits where there is an expectation of greater restraint. There have been many cases over the past few years of organizations getting in hot water because of perceived excesses, the most recent being New York Governor Andrew Cuomo's investigation of nonprofit executive pay in the state.

The easiest way to determine whether executives at your nonprofit are being paid appropriately is to look at what the big wigs at similar organizations are making. In NPT's 2011 Salary and Benefits Report, we see that the size of the nonprofit plays a big role in the compensation of executives. Organizations with an operating budget of $0 to $499,999 gave top employees an average salary of $55,766. This number ballooned to $166,867 when the budget was $50,000,000 or more.

The field the agency is in also plays a big role in executive compensation. Our report shows that the Healthcare Sector, which is in great demand, gives out an average salary of $100,603. International/Foreign Affairs salaries are even higher, topping out at $110,057. The area that paid the lowest was the Arts, at $67,454. This isn't too much of a surprises at these institutions have seen a lot of funding cuts in recent years.

Your board should keep these numbers in mind when considering what to pay the CEO or other executive. If you want to learn more, purchase the 2011 Salary and Benefits Report. You should also make sure to participate in our 2012 Salary Survey, so these numbers can stay up-to-date.