News and analysis
September 22, 2014

Nonprofit CEO Pay Raises Are Still Below Pre-Recession Levels

Raises for nonprofit chief executives are growing but at a much slower rate than before the 2008 recession, a new study finds.

The median pay increase for top executives at nonprofits was 2.2 percent in 2012, up from 2 percent in 2011 and 1.6 percent in 2010. While that figure has been growing, however, the increases were still far below the 4 to 6 percent raises CEOs were earning before the recession, says Chuck McLean, vice president for research at GuideStar and the author of the study.

"Things are starting to get closer to normal," Mr. McLean says. "But the increases were still relatively puny compared to where they were in 2008, before the bottom fell out."

The GuideStar report, which collects financial information that nonprofits file with the Internal Revenue Service, is based on compensation data reported on 2012 informational tax returns for some 129,000 workers at about 91,000 organizations.

GuideStar’s analysis also found that salaries paid to chief executives at groups with annual budgets of $50-million or more are growing at a much faster rate than pay for leaders in the rest of the field, a trend that is further widening the already significant gap between larger and smaller charities.

Top executives at the largest charities saw median pay increases of about 4 percent in 2012 and earned a median salary of $444,108.

Leaders at charities with budgets of less than $250,000, meanwhile, saw increases of about 1 percent and earned a median salary of $44,806.

Gender Gap Persists

While the gulf continues to widen between the compensation packages offered at larger and smaller organizations, the GuideStar study shows that there has been little movement in closing the gap in pay between men and women CEOs.

Women who head organizations with budgets from $25-million to $49.9-million, for example, received 25 percent less than their male counterparts in 2012. That difference costs female leaders in that category $50,000 or more annually.

While GuideStar data show the gap has been shrinking over the past decade, Mr. McLean says the change has been "really, really slow."

Among women CEOs in the $25-million to $49.9-million budget category, median salaries have grown about 5.8 percent annually during the past decade. For men, those salaries have grown by about 4 percent a year.

But given the still significant disparity in pay, the growth rate for women executives is still too slow, says Pete Smith, president of Smith Compensation Consulting, in McLean, Va.

"The good news is it’s being addressed to some degree," he says. "The bad news is, it’s still inexplicable."

Women are also stagnating in their efforts to take over the leadership of larger groups. In 2012, women led fewer than 40 percent of nonprofits with budgets of $2.5-million or more—a figure that has barely moved since 2002, the study found.

That figure is even lower for organizations with budgets of $50-million or more. Women headed only 17 percent of such organizations in 2012, up just 1 percentage point during the past decade.

"I would describe the change as positive but glacial," Mr. McLean says.

Growth on the Horizon

If the economic recovery continues, Mr. Smith says, he expects salary growth will approach pre-recession levels.

This year, he says, many nonprofits are offering raises of 3 to 4 percent to CEOs. But it's unlikely that many organizations will spend as liberally as they did before 2008 anytime soon.

"The memory of the recession is still pretty strong," Mr. Smith says. "Organizations are basically saying that we can go ahead and be competitive this year, but let’s not go overboard. Nobody is cutting back, but it was a good lesson to be careful and conservative."

Among the study’s other findings:

  • For the ninth straight year, leaders in Washington had the highest median salary—$156,726—among the top 20 metropolitan areas.
  • Top executives at organizations that focus on science and technology earned a median salary of $174,748, making them the highest paid by program area. Leaders of religious organizations had the lowest reported median salary, $62,267.

Copies of the 2014 "GuideStar Nonprofit Compensation Report" are available in a variety of formats at prices ranging from $349 to $1,449 at Guidestar.org.