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New Insights into Utah’s Charitable Nonprofits’ Employee Compensation Packages
by Derrek Hanson and Nancy Basinger PhD
Introduction
This past fall, the Utah Nonprofits Association, in conjunction with The Center for Public Policy and Administration at the University of Utah, collected data and issued a report that provides a comprehensive picture of compensation packages of employees working for Utah’s nonprofits. This article compares the average salaries for Utah and the nation in several categories of nonprofit employees. In addition, we identify trends in benefit packages for employees of Utah’s charities by comparing survey results from 2006 with 2003 results.
Background
All managers want to attract, retain and reward quality employees; providing appropriate compensation packages is an important element in attaining this goal. Charitable nonprofits struggle to balance the demands of the labor market to pay higher salaries with donor expectations and IRS regulations to keep costs low. Traditionally, nonprofit employees have reported that the flexibility and benefits offered by their employers helped to balance the relatively lower salary levels paid by charities. However, little comprehensive information on nonprofit compensation packages is available to support this commonly accepted notion.
In 2006, the majority of Utah’s nonprofits - just over 50% - reported using contracted workers and 40% hired temporary workers during some part of 2006. Although nearly half of all registered 501(c )(3) organizations in Utah have no paid employees, the remaining half have an average of 26 full-time employees and 37 total employees. Of those nonprofits that pay wages, half pay at least 50% of total expenses in wages and salaries.
Salaries – a national comparison
In general, Utah’s nonprofit managers are paid significantly less than those in similarly sized nonprofits across the country (see Table One). For example, in the Executive Director/CEO position, the national average annual salary is $112,889. In Utah, those in this position earn an average salary of $65,439, a difference of 42%. Nationally, the Chief Financial Officers (CFO) position pays an average annual salary of $82,739; Utah CFOs earn an average of only $50,771, a difference of nearly 39%. This gap in mean salary paid for top managers is significant across position types and across organization size up to the level $10 million budget level. In contrast, nonprofit managers of those Utah 501(c)(3) organizations with annual expense levels in excess of $10 million, receive a salary that is in parity with, or above, the national average. For example, in organizations in the $10 million to $25 million in annual expense range, the Department Director position pays a very similar average salary in Utah ($70,000) and nationally ($69,237). These large nonprofits pay an the average salary nationally for a Marketing Director of $62,173 and in Utah the average is $89,368, a difference of nearly 41%.
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Table One:
Mean Salary by Position |
|
Executive Director |
CFO |
Development Director |
Marketing Director |
Volunteer Director |
Department Director |
Total Annual Expenses
|
UT |
USA |
UT |
USA |
UT |
USA |
UT |
USA |
UT |
USA |
UT |
USA |
Under $500K |
$41,679 |
$56,425 |
$22,365 |
$38,173 |
$29,660 |
$33,493 |
$20,325 |
$30,819 |
$17,850 |
$25,484 |
$30,355 |
$33,203 |
$500 K - $1 M |
$62,643 |
$71,808 |
$34,239 |
$48,441 |
$40,763 |
$46,369 |
$32,564 |
$38,067 |
$20,114 |
$33,862 |
$39,793 |
$43,949 |
$1 M - $9.9 M |
$82,383 |
$101,136 |
$52,063 |
$68,923 |
$45,244 |
$64,650 |
$66,009 |
$53,308 |
$26,305 |
$39,047 |
$48,253 |
$60,456 |
$10 M - $24.9 M
|
$184,389 |
$152,774 |
$84,504 |
$93,817 |
$80,125 |
$84,392 |
$89,368 |
$63,396 |
$43,467 |
$44,107 |
$70,000 |
$69,237 |
Overall Mean* |
$65,439 |
$112,889 |
$50,771 |
$82,739 |
$45,546 |
$71,825 |
$51,555 |
$62,173 |
$23,606 |
$42,180 |
$43,627 |
$62,727 |
|
*Note: For $25 mil and $50 mil+ categories of NPT, too few to report in UT, but all NPT categories in Overall Mean |
Nonprofit employee salaries in Utah are also not increasing as quickly as the national average. According to the 2007 annual salary survey conducted by The Nonprofit Times, the national average annual increase in nonprofit sector salaries for the past two years is 3.3% while the average increase in Utah was 2.78%.
Benefits – the Utah trends
Little information is available on the national averages of benefits offered to nonprofit employees. According to The Nonprofit Times, 2003 employee health insurance premiums increased at a mean rate of nearly 18 percent and prescription drug costs have been increasing even more rapidly. It is increasingly difficult for organizations in all sectors to provide quality benefits to their employees due to financial constraints.
In both 2003 and 2006, nearly all of Utah’s nonprofits said that they offered vacation, sick, and some sort of paid holiday or compensatory time to their full time staff. In 2006, the survey also revealed that on average approximately 67% of organizations provided these benefits for hourly employees. Seventy-four percent of Utah nonprofits offered health insurance to employees working at least an average of 30 hours per week (see Graph One: Utah Nonprofit Benefits). Utah’s nonprofits paid an average of 77% of health insurance premiums for these employees. In addition, 36% of nonprofits offered disability and other similar forms of supplemental insurance.
 Retirement benefits were offered by 57% of nonprofits; the most common was an employer contribution of 2% of annual wages or an employer match of the employee contribution of up to 3% of annual wages. Graph One shows the percent of nonprofits that reported offering the various health-related and additional benefits in 2003 and 2006. Most notably, the percentage of organizations offering each type of benefit to employees and their dependents has dropped in every category from 2003 to 2006. Although the percent of organizations offering health care benefits to employees decreased only slightly from 2003 to 2006, the decrease in the percentage of organizations offering retirement benefits decreased by nearly 10%. The largest benefit reductions were those offered for employee dependent health, vision, and dental insurance.
Conclusion
This article provides a snapshot of the primary findings and changes in the results of the two Utah surveys and The Nonprofit Times Salary Surveys. These comparative analyses make clear that the majority of Utah’s nonprofit employees are earning significantly less than the national average, even when controlling for organization size. Further, across benefit categories, benefits in Utah’s nonprofit sector are quickly shrinking. Finally, more than 10% of Utah nonprofits stopped providing several types of health insurance benefits for employee dependents over the past three years. Upcoming articles in this series will provide a more detailed analysis of these health insurance issues, as well as other human resource issues in Utah’s nonprofits.
---------------
Data Sources:
Basinger, Nancy Winemiller (2006) The Utah Nonprofits Association Report on the Salary and Benefits in Utah’s Charitable Nonprofits.
Hrywna, Mark (2007). 2007 Nonprofit Times Salary Survey Special Report. www.nptimes.com
Jones, Jeff, 2004. The Nonprofit Times Special Report: The 2004 Salary Survey. www.nptimes.com/Feb04/specialreport.pdf
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