Ultimate Guide to Nonprofit Executive Director Compensation

Overall, watchdogs can be instrumental in improving nonprofit performance, increasing public trust and inspiring philanthropy. In comparing 26 different occupations, nonprofit work was one among the six professions with the worst experiences of physical health, psychological well-being, and job satisfaction. Nearly half of the workforce state they are consistently exhausted because of their job. For the past 11 years, Gail McGovern has served as president and CEO of the American Red Cross, and in 2018, she was paid $694,000, which reflects her leadership of the country’s largest humanitarian organization. Spend every dollar strategically, so that you are making a good investment. Focus on proven strategies for retaining the supporters you have and gaining new supporters.

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It’s noteworthy that there’s no hard-and-fast rule guiding the emolument of nonprofit staff since they are a not-for-profit organization. But it would help if your employees receive compensation in line with salary surveys of similar groups. 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.

Personnel Expense Ratio

The higher this ratio is, the less likely a nonprofit organization will be able to continue to support its programs in the event that funding goes away. Organizations with high ratios in this category should consider how they can diversify their revenue sources. When it comes to the financial management of a nonprofit organization, nonprofit ratios (or key performance indicators) can be a helpful tool to measure how your organization is doing. To answer this question for our members, ChurchSalary surveyed over 3,000 churches about their spending on staff salaries and benefits.

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From culture management to harassment prevention to diversity, equity and inclusion, Nonprofit HR provides the needed knowledge and insights for your organization to best support your people. For those passionate about driving social change, a career in the nonprofit sector offers a unique blend of purpose and compensation. This table provides a detailed overview of the salary ranges for key nonprofit positions across the East Coast, Midwest, and West Coast regions. For example, if an organization’s typical payment terms are net 30 days, then you would expect the accounts receivable turnover to be around 12 times per year (every 30 days). ChurchSalary is made possible through funding from the Lilly Endowment Inc. To get more ideas of what to ask for in a total compensation package – beyond salary – check out my training on the 25+ ways EDs can make more money and have less stress.

If you’re creating or reading a job description that doesn’t include these core responsibilities (such as a small foundation that really just wants administrative support), it’s worth taking a step back and reconsidering. The key to properly managing the finances of a nonprofit organization is proper planning and continual oversight. The budget should have a strategic reason, not just balanced for the sake of being balanced.

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Depending on the size of the church, the median ranges between 47 and 52 percent (trending higher as budget increases). The mean salary nationally for women executives of nonprofits with budgets between $5 and $10 million was $82,314. Every organization and situation is different, which means additional factors may affect an executive director’s pay. The most obvious factors are the salary of the previous executive director, the salary of the next highest-paid employee, and internal compensation policies. Like any other role, compensation for nonprofit executive directors is determined by a mix of factors. Yes, you can find plenty of reports on the average salaries of nonprofit executive directors online.

• However, in my experience, the vast majority of unpaid executive directors would prefer some form of compensation but the organization may not have the funds.
• I’ll show you how to calculate it and how to meaningfully interpret those numbers.
• Organizations suffer when they spend too little on fundraising and when they spend too much.
• When we look at an organization’s personnel expense ratio, comparing and interpreting this number can be much more nuanced, because this ratio really could look very different even from one healthy nonprofit to another.

For most organizations, salary is determined through a negotiation between the organization making the offer (through the board, recruiter, or search firm) and the incoming executive director. Compensation policies are constructed by human resources experts to help the organization decide what it values when setting compensation (e.g. experience over education or credentials over seniority). Once the organization sets its priorities, it conducts research on comparable organizations and roles. Finally, the organization sets pay bands that create transparency and consistency. I recommend starting by understanding the core responsibilities of an executive director.

There’s no denying that most nonprofits heavily rely on fundraising events to generate funding to finance their payroll. However, a recent event has shown that many uncertainties can seriously hamper fundraising efforts. For instance, the Covid-19 pandemic has impacted many nonprofits’ revenue generation, leading to some of them becoming cash-strapped and unable to pay their employees. Non Profit Pay Scale and Other Recommendations The Better Business Bureau’s standards recommend that at least 65 percent of the nonprofit’s total expenses should be for program expenses, including salaries. Yes, nonprofit grants can be used to cover payroll expenses so long as the staff is working on projects related to the grant.

Despite what you may read online, there is no average executive director salary number that you should aim for. Yes, there are organizations like GuideStar and others that produce salary summaries https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ annually and this data is important. For example, frontline organizers or helpline staff may be paid between $35K-$40K annually, depending on credentials, education, etc. The executive director would then be paid between $95K-$105K based on similar criteria.