My controversial views on nonprofit wages

I am presenting my analysis of studies that compare nonprofit, for-profit and government wages at the Nonprofit West Coast Data Conference. Since this is an academic conference I must stick to the data rather than state my opinions. However, there is so much I want to say beyond my presentation. Luckily this blog is all about stating my opinion and I don't have to worry about sticking to research protocol. :) So...here are my controversial views on nonprofit wages.

I was outraged when the 2009 Independent Sector policy platform stated “most nonprofit employees earn wages that are considerably lower than their counterparts in either for-profit businesses or government" (p. 3). I have been reading alot about nonprofit wages recently and found studies that reported nonprofit workers made comparable wages to for-profit workers in select industries (Salomon & Sokolowski, 2006, Ruhm & Borkoski, 2003).

It appears many members of the general public, nonprofit workers and funders believe that nonprofit workers are paid less than for-profit workers even though there are studies that contradict this low-wage perception.

I believe many members of the general public, nonprofit workers and funders believe nonprofit workers make less wages than for-profit workers because of funder and IRS influence on nonprofit wages.

1) Many funders want nonprofits to have low overhead percentages. Since salaries are considered overhead, many funders want nonprofit wages to be low and might react negatively to higher nonprofit wages.

Also funders have influence over many national nonprofits especially the Independent Sector which has many high power philanthropists as members of their organization. These members may want nonprofit salaries to remain how they are so if the Independent Sector changed their policy brief to state nonprofit workers make comparable to for-profit workers, they may receive many negative reactions from donors and policy makers.

My counter argument to funder influence is assuming the studies are true that nonprofit workers make comparable wages to for-profit workers. Because of these comparable wages, nonprofits would be able to recruit more qualified workers, and these qualified workers would generate diverse funding beyond the traditional foundation and individual donor sources. It appears that organizations are already moving beyond traditional funding sources and may not need to ask for funding from these sources if this trend continues. I believe higher wages can also lead to increased organizational efficiency.

2) The IRS is another key influence in the nonprofit wage arena because they regulate 990 reporting and executive compensation. The IRS recently changed the nonprofit tax form 990 to get more information from nonprofits and as a result many nonprofits are struggling to learn the new reporting requirements. The IRS also started cracking down on nonprofit executive compensation levels (Guidestar, 2007) and determining what compensation levels are appropriate. They may begin to regulate all nonprofit pay if they perceive it to be too high.

As a counter argument to the IRS influence, as stated above, I believe higher wages can allow for nonprofits to recruit more qualified workers. These qualified workers can find innovative ways to operate nonprofits that turn away from the traditional 501c3 charities. This trend is already starting to occur with organizations that are doing well without having to be a 501c3.

These counter arguments help look at nonprofit wage in new ways in order to recruit qualified workers into the sector.

What do you think? Do you believe the nonprofit l0w-wage perception? What are some ways nonprofits can look at wages in a new way?

Have you visited Idealist.org recently?

I just got back from conducting focus groups in Oregon and I got to spend time with the super fabulous staff at Idealist.org's Portland, OR office. I've always been a fan of Idealist but meeting the Oregon Idealist team was the icing on the cake for me.

The Idealist staff are amazing passionate people who deeply care about providing the latest and greatest resources about nonprofit careers, public service grad school, international volunteering and year of service opportunities.

Idealist is known for their job postings, career and graduate fairs, however did you know they provide other resources too?

Idealist now has a Public Service grad school resource center that provides everything you need to know about pursuing an advanced degree in public/nonprofit service. Amy Potthast, Jung Fitzpatrick, and Chris Machuca created this awesome resource center. Amy is also a former PeaceCorps, Americorps and Vista member and expert about Year of Service opportunities.

Then there is Idealist's Guide to Nonprofit Careers. This handbook provides helpful advice and information about nonprofit careers and the nonprofit sector. Thanks to authors Meg Busse and Steve Pascal-Joiner for writing this amazing handbook.

I'm sure your probably familar with Idealist nonprofit career fairs, but did you know about the Nonprofit HR Resource center. I highly recommend you visit this site if you manage HR or operations for a nonprofit. I've visited this site many times when I worked in nonprofit operations and it was very helpful to me. Thanks to Joe Grant for managing Idealist Career Fairs and the Nonprofit HR Resource center.

Last, Idealist recently launched their a brand new International Volunteerism Resource Center. Anyone interested in international development must check out this site, it is very comprehensive. Erin Barnhart created this resource and knows everything you need to know about volunteering abroad.

I also don't want to forget Russ Finkelstein who leads the Portland, OR Idealist office, the amazing developers that keep the Idealist website running smoothly and the interns that help with special projects. Thanks for all you do to provide great resources to the nonprofit sector!

As a caveat: Idealist is not paying me to write this blog post, however the nonprofit research center where I work is the researcher and evaluator of their newest initiative Nonprofit Careers Month. The goal of Nonprofit Careers Month is to raise awareness of nonprofit careers and it will be piloted 5 states this October. Stay tuned for more information about Nonprofit Careers Month.

Rejection can be a good thing

A couple of months ago I submitted the paper "Using Organizational Theory Metaphors to Solve Nonprofit Issues" to present at a nonprofit academic conference and it was recently rejected. This was the first time I was rejected to present at a nonprofit academic conference. Surprisingly, I wasn't upset by this rejection because four people reviewed the paper I wrote and provided me with really helpful comments and suggestions to improve the paper.

The reviewers appreciated my topic choice and the argument I was trying to make but they provided suggestions on content and structure that would make my paper stronger. These suggestions helped me to think about my paper in a different way and for that I am appreciative of.

Word Cloud -- Nonprofit Leadership 601

My statistics professor recently discovered word clouds as a way to present qualitative research data. Some of the techies in the class showed him examples of how word clouds are used all over the net. In fact, I discovered the website Wordle where you can create your own word cloud from any website or any group of words.

So I decided to create a word cloud for Nonprofit Leadership 601.

The Disconnect Between Research and Practice: The US Nonprofit infrastructure Mapped

I was on a conference call for the Next Generation Leadership Forum, a coalition of many US nonprofit infrastructure organizations (Idealist, CompassPoint, NCN, BoardSource, GVSU, YNPN and more) all passionate about nonprofit leadership resources and research in the sector.

One person on the call mentioned: Have you seen the most recent Nonprofit Quarterly where David Renz and his team mapped the US Nonprofit Infrastructure?

Only one person answered yes. Let me repeat that...only one person on a call of nonprofit infrastructure organizations was aware of the research that Renz and his team did to map the US Nonprofit Infrastructure.

Does this seem a little odd to you? It did to me, in fact my stomach sunk and I thought why weren't these infrastructure groups involved in creating this map?

To create the map, the researchers looked at the organizational websites, 990 forms, and annual reports. Then they decided on 10 key areas that are needed to keep the nonprofit sector moving forward. I can't list the ten items because of NPQ copy write issues, however I wonder if the infrastructure organizations had been involved in this study, would these 10 areas be the same?

This is a complex issue and something that is tough for me to blog about because I do believe the map is a step in the right direction and what we need in the sector, however I also strongly believe there is a continued disconnect between research and practice that needs to be brought to the surface.

It pains me for researchers and funders to not involve practitioners in research studies because it takes time and money to do so. However if Renz and his team involved US infrastructure groups or coalitions of US infrastructure groups in this research, the findings would be better informed, more comprehensive and much more robust. I realize the editors and editorial board did not want the map to be comprehensive (which is disappointing), however what would the map really look like if Renz and his team involved more infrastructure organizations in the process?

For example: The Education and Leader Development category is missing many national organizations that do mentoring a leadership development: see the Nonprofit Congress's Nonprofit Leadership Sampler for a list.

Also, why aren’t Commongood Careers or Nonprofit HR Solutions (two national organizations that have released important research about the nonprofit employment and workforce) included on the map?

As a caveat: I am a huge fan of David Renz for he has done a lot of great research on nonprofit governance and I like Erin Nemenoff too she's a next gen doctoral student who worked on the project, however I think capacity and funding issues prevented Renz and his team from doing a comprehensive study and involving (many) infrastructure groups during the research process.