Women working in nonprofits in southwestern Pennsylvania in 2017 are making 81 cents on the dollar to men doing the same job, but there is reason to feel hopeful. In 2015, the figure was 75 cents on the dollar. Still, we have 19 cents to go, and according to statistics from the Institute for Women’s Policy Research, as a white woman I will be 106 before pay equity is achieved. If I was Latina, I would be 298 years old before seeing equity.
Why does this matter?
Since 2002, the Bayer Center for Nonprofit Management at Robert Morris University, for which I work as Founding Executive Director, has done a bi-annual wage and benefit study for nonprofit organizations in Southwestern Pennsylvania. When we began, the study revealed a pay gap for women in nonprofits doing the same job as men at similarly-sized organizations that far exceeded the national pay gap for all working women. Ten years ago, the number was 63 cents on the dollar to men. These facts are particularly difficult to accept because these are people working for organizations dedicated to social justice. And these facts are crucial to an industry whose workforce is 74 percent women. Like any industry, the quality of the workforce in nonprofits is a critical success factor now and for our future.
Post the 2008 recession, there remains a “brittleness in the nonprofit sector,” according to the Nonprofit Finance Fund’s “State of the Nonprofit Sector 2015.” NPOs of all sizes report these major concerns: long-term sustainability, staff retention and competitive wages. This report was done well before the earthquake of our recent political changes; this brittleness is now coupled with devastating uncertainties for many NPOs.
If one accepts that better human resource management practices are of vital importance to facing the challenges of our community’s future, it becomes clear that long-term sustainability and staff retention with competitive wages are inextricably linked. Since 2010, the Bayer Center’s research, “74 Percent: Exploring the Lives of Women in Nonprofits,” focused on pay equity. In addition to the need for more equable compensation, there is another important reality: Baby boomers are turning 65 at the rate of 10,000 a day.
The boomers built the nonprofit sector. Under their leadership, the sector grew from 250,000 organizations registered with the IRS in the 1970s to today’s 1.5 million. More than 4,000 of those are in Allegheny County. Better HR means better prepared leaders, those exiting and those ascending. Therefore, the attraction of talent must be added to the list of key concerns for sustainability and retention.
We have several generations at work in our NPOs. As we consider the importance of competitive compensation, we need to take a longer look at the underpinnings of our current situation. The boomers, an idealistic group who were especially socially engaged, went to work to achieve some of their social justice ideals. They founded countless organizations from runaway hotlines to avant-garde dance troupes.
These hippie children often with no student debt worked for a pittance. When Reagan’s revolution occurred in the early 1980s, many health and human services agencies began to grow rapidly. But there were huge numbers of educated, passionate people to fill those jobs, so HR remained an unfunded mandate, a low priority. Many government contracts required low pay. Some donors expressed skepticism about overhead, i.e. salaries and benefits. Donors asked appropriately hard questions about impact and results, however they seldom asked questions about talent retention and the importance of strong staff leadership.
We have a different reality today. Long-term sustainability, retention and attraction of employees are becoming a core strategy.
Nonprofit boards as employers
So who can best address these concerns? The answer is nonprofit boards of directors. Many people recruited for boards are asked because for their expertise, but most come for the cause. Seeing themselves as employers in a race for talent has not been the norm.
Many boomer leaders are considering the best time to retire. The age cohort of Generation X has half as many people in it. But as more and more leadership transitions occur and the talent pool shrinks dramatically, boards need to be doing effective succession planning, working to see that they are paying competitively and positioning themselves to be an employer of choice.
Our study shows only 26 percent of the reporting agencies have succession plans. Nearly 50 percent of executives hired in the last five years are current or former employees or board members. There are virtues to hiring a known quantity, but having a robust talent acquisition practice which includes looking beyond the immediate family could breathe new energy into a sector that must be flexible and innovative.
In HR, as in fundraising, small nonprofits (nonprofits with 10 or fewer employees have been estimated to exceed 90 percent of all NPOs), these unfunded management challenges are highly disadvantaging. If a war on talent does indeed break out, they are poorly positioned to win it.
So the stakes are high for raising these issues and winning this particular long game. Therefore, today, I call for heightened attention to HR in every nonprofit. Staff leaders should actively be building their bench. Boards of directors must own their responsibilities as employers as well as champions of mission. Given the daily contributions made by nonprofit organizations, we all have a stake in the continued success of our nonprofits.