6 Ways Salary Reports Help Nonprofits Improve Recruiting Strategies

Employee compensation is one of the largest operating expenses for nonprofit organizations. Getting the compensation, or ‘total rewards’ expenditure right can be a significant differentiator in organizational stability, fiscal solvency, and in some states such as New York, regulatory compliance.

Many nonprofits are feeling the squeeze of the current economy when it comes to talent strategy, while low unemployment means fewer highly skilled, experienced candidates are available. As a result, over half of organizations say they’re finding it difficult to recruit and hire.

Now more than ever, having access to industry salary reports can help organizations gain insight into what is happening outside their own purview. When it comes to talent acquisition and management, this insight can play a key role in budgeting and recruiting success.

Here are six ways nonprofit salary reports can inform current and upcoming budgets, recruiting strategies, and improve the likelihood of hiring and retaining talented staff.

1. Make a viable first offer.

Nearly two-thirds (65%) of nonprofit executives surveyed for the Nonprofit Compensation and Benchmarking Report say the top reason they lose candidates is that candidates’ salary requirements exceed the pay range they can offer for the role. To make a viable first offer, you have to know what the market expects.

Salary reports can provide insight into the typical pay range by organization size and by role, helping you attract qualified candidates with competitive pay (especially if you are in a state where pay ranges must be published). Understanding market rates helps management proactively create an enticing rewards strategy, especially if it is tough to meet market rate salary ranges.

2. Shorten the hiring window.

Over half of organizations have vacancies that go unfilled for an average of 60 – 120 days, with 16% going unfilled up to six months. Extended salary negotiations delay the hiring process, results in the loss of talented candidates, causes more frustration for employees who are covering for staff shortages, and increases recruitment costs. In addition, if the vacancy is a senior development role, donation impact can be significant. Doubling the time it takes to fill a job vacancy results in a 3 percent drop in profits, so it’s easy to see how a longer hiring window could impact nonprofit revenue.

Several nonprofit reports cover staffing trends and compensation, suggest starting negotiations within a viable range and making offers quickly. Shortening the time-to-hire window is a critical objective, especially for high demand positions.

3. Include for-profit companies in the search for top talent.

Many nonprofits hire from outside the nonprofit sector, especially for CEO, financial professionals, HR, IT, and other positions. National and regional salary reports can help you understand and benchmark the compensation ranges required to compete effectively for talent by sector, geography, experience and skill levels.

As recently as fall 2023, mission alignment was rated as one of the top three most important factors in hiring. The Bridgespan Group reports those who move from corporations to nonprofit organizations frequently cite benefits such as making a difference, working with passionate colleagues, and the opportunity to grow professionally. For many “bridgers,” the desire to make a difference in the world marks the beginning of their journey to the nonprofit sector. Research from the McCombs School of Business at the University of Texas at Austin highlights “social impact framing” and suggests it might also influence whether job candidates negotiate on their salary or not.

4. Ensure pay equity.

Pay equity is essential – and not just because it is the right thing to do. It is the law. The Equal Pay Act signed into law in 1963, requires that men and women in the same workplace be given equal pay for substantially equal work. Furthermore, Title VII, ADEA and ADA laws prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, age or disability. “Intermediate Sanctions” reinforce regulations that nonprofit organizations are prohibited from transactions that provide excess benefits to disqualified persons within the organization, usually executive staff, and any family members, beyond the value of services provided to the organization.

Reflektive, an organization focused on performance management and employee engagement, reports “Pay inequity can lead to higher rates of employee turnover, with the attendant costs of hiring and onboarding new talent. Finding new talent may be difficult for a business with a reputation for unequal pay.”

Salary reports provide a benchmark for what people earn by role across the sector helping you competitively compete for talent, and, serve as a guidepost to identify potential internal pay equity imbalances among employees performing substantially similar work but with varying job titles.

5. Devise creative benefits.

Regardless of your best intentions, there may be times when the salary budget falls short of industry standards, especially when fundraising support is lower than normal or environmental conditions require excessive service delivery.

In this case, the salary ranges included in nonprofit salary reports can help you offer the best compensation you can afford, while filling in gaps with creative, less costly and/or high demand rewards and benefits, such as offering work/life flexibility, professional development, skills training, conference attendance, etc. as part of the total package.

6. Plan for turnover and attrition.

Aside from employee turnover, promotions and retirements necessitate ongoing hiring. A smart talent strategy anticipates these personnel changes, allowing HR to plan for them in the coming year. As part of talent planning, salary reports can help organizations budget for filling those vacancies with appropriate compensation and fewer surprises.

More than just showing you where your organization stands relative to the rest of the industry, salary reports provide insight that can help you plan a smarter budget, improve retention, and secure the best talent to fulfill your mission, especially in today’s competitive marketplace.

Download the free Career Blazers Nonprofit Compensation Practices and Benchmarking Report.