The Great Debate: How important is the issue that women make less than men?

Last Tuesday night on Equal Pay Day 2015, the 74% Project of Bayer Center for Nonprofit Management at Robert Morris University staged a debate. The resolution was: Nonprofits have more important priorities than addressing the issue of pay equity. Yes, in 2015, it is still necessary to debate whether equally qualified women should be paid equally for equal work in the nonprofit sector – a sector in which women are paid $.75 on the dollar for their work compared to the work of men in similar positions at similarly sized organizations. Though this is inherently hypocritical for the sector that is also called the social justice sector, the debate needed to occur in order to change what is abundantly true.

Here are some things to consider. When it comes to compensation in the nonprofit sector, it is better to have a man as the chair of the board of directors. It is a lot better for men, but it is also better for women executives. There are two arresting facts about employment today in the nonprofit sector. One is that the workforce is 74% women – making it far more dominated by a single sex than either business or the government. Second, this 74% has a greater pay equity gap than either business or government.

Why the emphasis on the gender of the board chair?  In southwestern Pennsylvania, having a male board chair, on average, advantages a man leading a large nonprofit as much as $100,000 a year over a woman leading the similarly sized organization who has a woman as her chair. The individuals who hold these positions have advanced degrees and years of experience – and many other opportunities for employment. They choose to work in NPOs.

SWPA Nonprofits with annual operating budgets in excess of $7 million,

drawn from IRS Form 990 reports

Why is this true?  Although women make up 74% of the workforce, the top jobs both paid and volunteer are disproportionately held by men. In the 100 largest local nonprofits, men hold three quarters of the CEO positions. This same proportion is true for board chairs. Although the nonprofit sector believes itself to be the bastion of social justice, when you look closely at the statistics on employment, it is clear that it is less true in nonprofits than the rest of society. And this is true not only in compensation, but also in women’s access to power and influence when serving.

Women board chairs are often consensual leaders. They have a reluctance to be labeled as bossy and a belief that including other people’s opinions in a shared solution is their job. Such beliefs are possibly the reason why research shows companies with more women included in top management are more profitable. However, in the case of setting salaries, it seems that the more direct advocacy practiced by male board leaders…”He’s good. We need to keep him. We need to pay him well.” has resulted in the reality of the chart you see above.

Who can change this? The two primary sources of authority in the sector are boards of directors and the funding community. Neither has been focused on issues of employment, equity or talent retention. Everyone has espoused the importance of adherence to mission and business-like behavior, but few have connected these aspirations to ensuring the health of the primary asset of every business – its workforce.

Nonprofit boards are volunteers. Most agree to serve because they are inspired by the mission of the organization. Many volunteers have little HR experience themselves. Most board orientation and training includes little mention of HR and thus, few boards accept responsibility to act as employers and therefore, the tools that might have addressed merit and advancement are often absent. According to a national study, Daring to Lead, almost 50% of nonprofit top leadership receive no annual evaluation, indicating a lack of effective HR that is near total in most NPOs. At the debate, Heather Arnet of the Women and Girls Foundation argued that women often carry their pay gap with them as boards set salaries based on the person’s previous salary rather than the salary being set by position. This lack of sophistication in compensation practice ensures that pay inequity is perpetuated.

Funders have appropriately demanded greatly improved systems of financial management over recent years. They have been unwilling to accept messy financials, but have often ignored issues of poor human resource management as part of their criteria for funding. No nonprofit executive wants funders in their business, but this is one place where an outside authority deeply respected by many board members could exert useful pressure that leads to changes that improve people’s lives. It is reasonable to expect effectiveness and efficiency from grantees. We must also include in our expectations, fairness.

To be sure, this is a complex issue in an environment of tight resources and great human need. At our debate, Grant Oliphant of the Heinz Endowments who was Master of Ceremonies, asserted that inequity erodes morale, low morale erodes capacity, inadequate capacity diminishes execution and excellence in execution is what makes any enterprise worthy of investment. This is the argument we need to have. We must hold nonprofit employees to high standards of performance and we must pay for performance in order to secure the quality of life to which we aspire for all our citizens. We want it to be fully true that decency and justice are characteristic in our beloved community. Join the 74% movement!

This article was written by Peggy Morrison Outon, executive director of the Bayer Center for Nonprofit Management at Robert Morris University. Peggy has led research on the 74% since 2008.  A nationally recognized leader in nonprofit capacity building for the last thirty years, she served as the founding Board Chair for The Alliance for Nonprofit Management, was chosen for the Nonprofit Times 2006 Top 50 in Power & Influence, and has personally served as an organizational effectiveness consultant to more than 1,000 nonprofits from Louisiana to Pennsylvania.