Nonprofit Compensation Considerations for 2023

I saw a funny meme the other day about unemployment. It showed a woman wearing various accessories with logos representing multiple income streams- a Walmart vest, an Uber hat,  a DoorDash shirt, etc. The point of the meme was to question whether our low unemployment numbers are really just evidence that more people than ever are having to work multiple jobs to support themselves in these high inflationary times. Well, tis the season to think about pay raises and budgets, and this year, inflation is certainly a factor in those cost of living increases. 

Cost of Living Increases for Nonprofit Employees

     You may be wondering how much of a cost of living increase you can offer your employees while still balancing your budget in light of rising costs across the board. Well, the percentages I’ve been hearing in initial reports are much larger than in previous years. I’ve heard reports of 4% and 4.25% pay increases in preliminary reports trickling out.

      Recently, I joined an ECFA webinar covering year-end financials that indicated its members will provide an average pay increase of 5% to employees next year. That’s awesome news for employees! A 5% increase will really be a blessing for nonprofit staff.  The same ECFA report also indicated that among their member churches, giving has increased 3%, which is also great news, considering we’re being told that people aren’t giving to nonprofits due to inflation. There are even some reports and surveys that suggest giving to nonprofits may actually be increasing further. 

     So… we have about a 3% increase in giving to nonprofits (hooray!) and we have a 5% increase in nonprofit employee compensation (hooray!) Taken separately, these statements are each awesome news! But when considered together, they present the challenge of balancing the budget when expenses are rising faster than income.

Nonprofit Compensation: The Non-Monetary Benefits

     With these hard numbers in mind, this is a great time to remember that, as a nonprofit, you offer many incalculable benefits to your employees in addition to their compensation, and those things go way beyond the dollars in their paycheck. So, pay as much as you can. Pay as much as you possibly can.   The hard-working people in your mission field deserve your very best efforts to pay them appropriately. But don't forget that you give your employees far more than just a paycheck…

Reward

Working in an organization whose culture aligns with your own personal values is not just rewarding- it’s increasingly rare. Doing work that is truly meaningful is rewarding. Going to work every day knowing that you are actually fulfilling your calling and your purpose in life isrewarding. That’s an intangible benefit most organizations can’t begin to offer their employees. 

     This Christmas, you may want to take a moment to reinforce this idea in a heartfelt conversation or note of appreciation to your staff. If you’re a board member, a note of appreciation can go a long way in helping your staff  connect the dots between their personal contribution (no matter how trivial or mundane it may seem) and their life-changing impact in your mission-field. Take the time to remind your staff that what they personally do really does matter to the people you serve. An example of this might be a note to someone in your accounting department, letting them know that their commitment to pay the bills on time is what gives your organization a good reputation in the community and gives others confidence to refer people in need to your organization for whatever type of support you offer- whether that’s a church family or support for unplanned pregnancy. No one recommends a place with a bad reputation, so your accounting staff is doing far more than approving receipts- they’re actually helping to lay a foundation of trustworthiness in your community, which is absolutely critical to any nonprofit. This is just one example of how to communicate value and purpose by connecting the dots between tasks and impact within your organization.

Flexibility

 The flexibility that you offer your employees is something that might not show up in a paycheck. If you want to be a family-friendly environment, increase the opportunities for flexibility. Whether it’s the chance to work from home or feeling supported when taking time off to attend a child’s activities, flexibility is a valuable benefit to your staff that can’t be easily quantified.

Rest

Another way to add value to your total employee compensation in 2023 is to encourage days of rest. An organizational culture that values and gives rest is an often overlooked benefit to your staff. The flexibility to recognize when an extra day of rest is appropriate is an even rarer benefit. When you see that employee going above and beyond in a busy season or an emotionally draining cycle in their work, offer them that extra day. Give them that day of rest to just do something for themselves and not have a commitment to anyone else. 

I hope these ideas are helpful to keep in mind as you consider employee compensation going into the new year. For more helpful articles just like this, follow me on LinkedIn here and click the bell to be notified each time I post a new article.