Drive Your Nonprofit’s Mission by Investing in Your People

Article Highlights:

• 7 steps to prioritize employee worth.
• So why isn’t equitable compensation the norm?
• Approach Cause Work with Abundance
• The Cost of Inequity is Too High
• So, what do we do?
• But doesn’t this mean higher overhead?
• 7 Steps to Prioritize Employee Worth
• Change is Hard but Powerful

In this article, the author argues that providing benefits and fair compensation for nonprofit employees leads directly toward the realization of mission.

7 steps to prioritize employee worth.

As a passionate and committed leader in the nonprofit sector, I firmly believe in the power of community organizations to drive positive, equitable change. There is no better way to drive our mission forward than to invest in the people doing the hard work.

In my two decades of experience, I have seen the immense rewards of creating an organization that values, nurtures, and believes in providing better working conditions for employees.

When nonprofits value the worth of their employees by creating competitive financial packages, recognizing that staff are choosing service work as a career, and prioritizing time to develop their skills and nurture their leadership, we can change how we have historically undervalued nonprofit employees, and everyone will benefit.

The crux of this article is simple: Nonprofits must advance their mission by valuing their employees’ worth through fair compensation and benefits and by celebrating their worth.

So why isn’t equitable compensation the norm?

I have witnessed firsthand in our community the high turnover rates, burnout, and complete undervaluing of nonprofit employees. Our sector needs to shift from a paradigm of scarcity and fear to one of worth and value. In nonprofits, scarcity has left us historically giving the bare minimum raises — or no raise at all — despite employee (and organizational) performance. Nonprofit leaders cannot shrink from ensuring their staff are fairly compensated.

These two inactions have stagnated our sector, impeding our organizations from competing for the best talent. Throughout the sector, we continuously see burnt-out employees or created environments of dissatisfaction with leadership. Our employees bounce around, trying to find a space where they feel valued and seen. Valuing employees and recognizing their CHOICE to work in the nonprofit sector feels like creating environments and spaces where employees are: 1) paid competitively to other sectors; 2) valued for their work as team members; and 3) acknowledged as the people who are most important to the advancement of the mission.

There are two reasons in particular that nonprofits often underpay their employees. First, there is this widespread notion that nonprofit employees do this work out of the kindness of their hearts — instead of as a way to make a living. This is, perhaps, a holdover from the paternalistic philanthropic model of the late 1800s, when so-called charity work (as opposed to mutual aid) was reserved for white, upper-middle-class women (and had its slew of racist, classist biases that came along with it). Secondly, there is this tendency for employers to prioritize volume over quality in their workforce. We must stop pushing our employees to constantly do more and recognize that good quality work takes time. Individuals, not machines, run our programs, and they deserve consideration for their well-being–be it a sick child, an undrivable ice storm, or a general lousy day where nothing works right. No one can work well if pushed to the brink constantly.   

It is not lost on me that women and people of color have historically been, and still are, paid a fraction of what their white male counterparts make. Considering that the nonprofit sector comprises 65% women and 25% BIPOC, it is unsurprising that the average nonprofit worker makes $67,000 annually nationally. In Oregon, the average is much lower at $46,934 annually. We can’t sit back and allow this trend to continue.

Approach Cause Work with Abundance

It is often true that nonprofit employees CHOOSE to work in a sector because they are called to do good or want to leave their community a bit better than it was found, but why does that need to come at a cost? Why is this work devalued? Why is it still okay to applaud and congratulate nonprofits on low overheads, celebrate large endowments, or, even worse, champion nonprofits who keep their salaries and benefits below living wages? Employees might need alternative cash flow or live close to poverty, which is especially difficult for employees with lived experiences.

What if, instead, we measured nonprofits by retention, their willingness to use reserves for salary increases (excluding bonuses), and the number of employees living above the poverty line? I get so tired of seeing wages posted for entry-level nonprofit jobs that require a degree and pay less than our program’s youth earn ($17 an hour). It’s absurd, especially when we KNOW these nonprofits are sitting on significant reserves.

Our sector leaders need to make a drastic shift. We must approach this work from abundance rather than scarcity. Would funders stop giving us money? Heck no!

Here, I want to use our nonprofit as an example. At Connected Lane County, we have experienced a growing trend, supported by data, in funders being more willing to invest in succession planning, capacity building, and general operating support. It makes sense once you consider walking into your space and leading with abundance. Rather than telling the story of dire things, approach a conversation with how the funder can further help your organization succeed. After all, who doesn’t want to be on a winning team?

The Cost of Inequity is Too High

As nonprofit employers, we need to take a stand to prioritize employee wages and benefits over the number of clients served. Ultimately, employee turnover costs more money than paying the workforce well — not to mention dramatically impacting the quality of service.

Have you ever priced out the cost of turnover? What does it cost to post, interview, hire, and train someone? What are the lost opportunity costs for someone filling in from a higher position?

We all know of nonprofits in our communities with high turnover rates in positions. The Nonprofit Leadership Alliance notes that the average turnover rate is 19% per year — or two people out of every ten hired. That’s HUGE, especially considering the cost of replacing a position can be twice that employee’s annual salary.

However, this number fails to account for the long-term costs. These include the lost opportunity costs of someone filling in temporarily as well as the damage to institutional knowledge. On top of turnover costs, the knowledge loss alone is astounding. According to research, 42% of the skills and expertise for a given role are known by only one person — the person currently holding the position.

So, what do we do?

Organizations need to work with their boards to look at pay and ask if paying their employees better would impact the outcomes the organization can achieve. Conversations about pay equity, staffing, and flexibility are difficult but of utmost importance.

At Connected Lane County, these conversations occurred when we formally began to divest from our parent organization. During this split, we knew we wanted a new approach to organizational culture, and our conversations with our board motivated us to examine our positions (including their technical aspects) and reframe our thoughts. As such, we began to reorient our mission around caring for people by creating work packages and inspiring employees to maintain a healthy work-life balance.

This means that, in practice, our graphic designer is just as important as our resource navigators. In both cases, they chose us because of our mission work. We saw that we needed to value what each brings to the table.

But doesn’t this mean higher overhead?

Let’s be clear: investing in staff is investing in direct service. Therefore, we should be careful not to critique nonprofits that support staff. So-called overhead simply does not take away from direct service.

Instead of celebrating low overhead, we must applaud nonprofits that pay their staff competitively. If we want to attract the next generation of nonprofit leaders, we cannot expect them to accept underpaid positions.

On the other hand, the incoming workforce will not tolerate the status quo. Here, Gen Z might come to our sector’s rescue instead of being its downfall (as perpetually and ominously foretold by media outlets, it seems). If we want our sector to remain intact, we must do better. This has been our narrative at Connected Lane County, and it has worked.

7 Steps to Prioritize Employee Worth

This all sounds great in theory, but let’s break it down into actionable steps. Here are seven ways to prioritize employee worth at your nonprofit.

1. Assess salary structures.

First, determine if a baseline wage in your community is considered a living wage. A living wage is the level of income necessary to afford things like food and shelter; it should be enough to keep people out of poverty. On the other hand, a minimum wage, the lowest amount of money someone can earn, is mandated by the federal government (and does not necessarily keep people out of poverty). Next, look at your pay: are all your employees at or above that level? If not, start with shifting to at least the living wage (if you can’t possibly afford any more than that).

For example, our region’s living wage is about $40,000 ($19.23/hour), and our region’s minimum wage is $29,536 ($14.20/hour) — for a single person without kids. At Connected Lane County, our entry-level base wage is $45,000. We aim to increase it to $50,000 in the next two years, knowing we must keep up with inflation.

2. Assess benefits, including retirement.

To be a competitive sector, we must compete with industry. To that end, Connected Lane County provides 100% employer-sponsored health, dental, and vision insurance for our employees and whoever they enroll. We also offer a 10% 401K retirement contribution, no match required, and a five-year vested schedule.

For us, this comes back to treating a nonprofit job like a career, not a job you work for because you’re charitable. We want to make the nonprofit sector a place where you can thrive in a career AND dream financially, not just live paycheck to paycheck, wondering how you will ever retire.

3. Offer a paid closure for all employees.

One way to encourage your employees to rejuvenate is to offer a paid office closure. For example, your organization might implement time off for everyone between December 26 and 31, around the 4th of July holiday, or at some other slower time for your organization. This affords your employees time to decompress, recharge, relax, and connect with loved ones.

In an environment where employees work hard and care about the people they serve, sometimes it can be easy to forget to recharge and rest. We have found that a paid closure between December 25 and January 1 provides space for employees to recharge. They return with renewed energy, creativity, gratitude, and excitement every year. It’s been a terrific way to kick off the year!

4. Normalize mental health days.

We regularly discuss at staff meetings that everyone is encouraged to take a sick day for mental health needs, and we coach employees to normalize this action. We discuss it during onboarding, we touch base with staff regularly when their accrued balances are high, and we’ve even mandated that our team that manages high-stakes events take a mental health day once per quarter.

Employees have expressed gratitude for this support and encouragement, and we’re actively working to make it a part of our culture. Team members have reported that mental health days have allowed them to feel more relaxed and able to tackle the complex challenges ahead of them.

Want to know how to get started? Try framing self-care as self-defense!

5. Talk about professional goals with each employee twice a year.

We set organizational, program, and individual goals yearly through meetings and work sessions. We encourage personal goals to align with program and organizational strategy, but it is equally important for each staff member to identify long-term professional goals and a leadership goal. Then, we build some professional development around that.

For example, many staff this year wanted to develop their advocacy and public speaking skills, so we formed a Toastmasters-like group that meets monthly, and we brought in a PR firm to lead us through a half-day session. Individually, the staff also mentioned wanting to learn about grant writing, social media, data analytics, etc., even though these skills are outside their current job scope. As such, we do what we can to support growth opportunities financially or by helping staff create time to build their skills.

6. Build community with staff.

In an impromptu discussion with a few employees, I asked them why they work for our organization. They said it is because of the team, the community we have built internally, and the value they KNOW they bring to the table. They are all passionate about the mission and make a great wage, but happy people are typically happy together, and joy breeds joy, right? Again, we must value the graphic designer as much as the resource navigator.

7. Rethink personnel policies and practices.

As a nonprofit leader, you are responsible for helping create the organizational culture. However, you must get input from staff. This often means having challenging conversations with your board. You might even host a few funders to engage in this conversation with you.

But it is up to you to make this change. As a leader, you have to commit to being abundant and valuing the worth and value of your employees.

Change is Hard but Powerful

After Connected Lane County began implementing these steps, we saw tremendous growth, retention, and satisfaction. Our turnover has averaged less than one person per year, while our income has exceeded our budget for the last three years. Our organization ranked as one of Oregon’s 100 Best Nonprofits to Work For in 2023. Our employees stay because they feel valued and supported in pursuing their dreams.

As nonprofit leaders, we cannot wait for society to realize that cause work does not need to mean poor compensation and benefits. We have to be the ones to make commitments and stand out to push that change forward. After all, investing in your employees impacts your organization’s outputs today, tomorrow, and ten years down the line.

So, join me in nurturing your employees and prioritizing their well-being. When your team feels uplifted and valued, their unwavering commitment will resonate in every interaction with your clients.

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