Compensation

The Nonprofit Compensation Gap Is Real — Here’s What to Do About It

We talk to candidates every day. And one of the most consistent things we hear from senior nonprofit professionals is that they’ve quietly started to feel undervalued. Not underappreciated. Undervalued. There’s a difference. Appreciation is what an organization expresses. Value is what it pays.

How the Gap Opens

It rarely happens all at once. A Director of Finance joins at $110,000 in 2021. They receive modest annual increases of 3%. By 2026, they’re at $124,000. Meanwhile, the market for that role has moved to $140,000–$155,000. They haven’t been poorly treated. They’ve been left behind by a market that moved faster than anyone was tracking.

Why Nonprofits Struggle to Keep Pace

The structural constraints are real. Nonprofit compensation is visible — IRS Form 990 filings disclose senior salaries publicly. Boards are accountable to donors who scrutinize overhead. And there’s a cultural hesitation in some organizations to pay “commercial rates” for mission-driven work. But the math is unavoidable: if your compensation is systematically below market, you will lose people.

How to Actually Benchmark Your Salaries

Start with published surveys. The Nonprofit HR Nonprofit Salaries Survey and regional association salary surveys provide market data broken down by role, organization size, and geography. For senior roles, supplementing with data from recent job postings in your market is also valuable.

Ask your recruiter. If you’re working with a staffing partner, they have direct, current market knowledge. We speak to candidates every week about compensation. We know what Directors of Programs are being offered this month. That information is genuinely useful to organizations trying to calibrate their ranges.

What to Do When You Find a Gap

Equity adjustments — one-time salary corrections to bring people to market — are often the most efficient approach for staff who are significantly below range. Framing them clearly, and doing them proactively rather than reactively, signals to staff that the organization is paying attention. It also tends to be far less expensive than the searches that follow when those staff members leave.

TPSG has worked exclusively in the nonprofit sector for over two decades. If your organization is navigating compensation benchmarking or a current search, we’d welcome a conversation.

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