View a PDF of salaries of DC Service Providers

Nationwide, many nonprofits, particularly homeless service providers, do not pay benefits. And, those that do, pay at a much lower level than private or government employers.

Mary Funke, the executive director of N Street Village, is earning no pension and said she is thankful she is well vested from previous jobs. N Street Village paid no benefits at all in 2004, but now pays some health and life insurance. “We could do more [in benefits] than we’re doing now, but the cost is prohibitive,” she said.

A Street Sense survey of DC nonprofits serving the homeless showed that nearly half of 63 organizations surveyed pay no benefits, and only a handful of CEOs received any insurance or pension benefits at all.

Looking at private industry, 2004 data from the Bureau of Labor Statistics (BLS) show that 21 percent of employees had a pension plan, 52 percent received some medical care benefits and 42% participated in other benefits such as life or dental insurance.

Of DC homeless-serving nonprofits that pay benefits, the average percentage of total compensation designated for benefits was only 5.2 percent in 2004 – compared to 29 percent for all civilian employees in this country, according to the BLS.

Employee Contributions to Benefits

Today, many employees must pay into their benefit plans, especially if they want to raise their benefits above some meager level. According to the BLS, “The large majority of employees covered by medical care plans [are] in plans requiring employee contributions for both single coverage and family coverage.”

Unfortunately, that’s just what nonprofit CEOs cannot afford to do. “Most executives say that by choosing to run a charity they have [already] made a significant financial sacrifice,” according to Jennifer C. Berkshire, who writes about the overwhelming duties and low pay causing nonprofit CEO resignations in the June issue of the Chronicle of Philanthropy.

Employees of DC’s nonprofits making poor wages would have to work multiple jobs – something which is impossible given their workloads – to afford purchasing their own insurance. Those without a spouse or partner providing these benefits must risk doing without.

Scott Schenkelberg is lucky. He is executive director of Miriam’s Kitchen, which contributed 5.4 % of his total 2004 compensation to benefits. While Miriam’s Kitchen pays him and other staff members benefits, the benefit rate is nowhere near that of private industry. He has a family to support and commented, “If anything, nonprofits should pay higher benefits, because the salary is so low.”

Young Employees, High Turnover

Because of this problem employees cannot afford to hold on. Beth Glascock, a former top executive of N Street Village, increased her salary by 60 percent when she left the nonprofit world. She emphasized that fundraisers and board members “should educate their donors that the nonprofit needs to pay a fair market rate to its employees.”

When a charity pays lower than this level, employees have to take multiple jobs to make ends meet. “Given their heavy workload for the nonprofit, this can lead to high turnover,” Glascock said.

“Nonprofits need to offer competitive salaries – and benefits – to attract competent employees,” Glascock stressed. “The alternative is to hire employees straight out of school, who lack the experience and required skills,” Glascock said. Further, the nonprofit supplies little training or professional development. Young employees frequently move on to more lucrative or less-stressful jobs.

A March 2006 article in the Chronicle of Philanthropy (“Foundations are Burning out Charity CEOs”) talks about a recent study of 2,000 nonprofit executive directors in eight cities – primarily from small and mid-size organizations. “Three-quarters of the executive directors plan to leave their jobs within the next five years, and most don’t want to be an executive director again,” the study revealed.

In addition, the study reported, these CEOs “fear that the salaries and benefits their organizations offer are too meager to attract the best people to the job.” Half of these top executives “had no retirement accounts, and most believed that their organization would need to offer a higher salary to their successors. Low salaries for executive directors contribute to stress and burnout, create a low salary ceiling for other senior employees, [and] affect the caliber of applications for positions.”

Crushing Workload

If the lack of benefits and low salaries are not enough to drive CEOs away, the crushing workload can bring burnout and early resignations. Andrea Morris, who left the Community Council for the Homeless at Friendship Place recently, said, “The compensation and benefits were okay – it was the workload that led me to leave. After eight years of being ‘on call’ 24 hours a day, I could not keep it up.” Morris has two school-age children. She felt like the Friendship Place charity was her “third child,” as demanding as her other two.

Working long days, Morris had to raise funds, write contracts and grant appeals, supervise the staff, administer operations and perform other tasks that kept her away from her family. She had to handle crises at all times of the day and night. “Running the shelter, providing food, guaranteeing safety, supporting the staff, dealing with frequent crises – even on a good day – wore me out.”

Morris escaped to a 9-to-5 position in development. She is now an associate director in the dean’s office at the College of Chemical and Life Sciences at the University of Maryland. “I was proud of my CCHFP work, but to operate successfully on a 24-hour basis called for a workload I could not maintain,” she said.

The irony, Morris noted, is that to increase her salary and benefits she would have to work even harder at fundraising or grant writing.

The next article in this series will discuss the emphasis on lowering the percentages of the budget spent both on management and general administration and on fundraising, as reported annually to the IRS for the nonprofit to retain its tax-exempt status.