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Training is a vital component of successful nonprofit organization management. But many nonprofit managers fail to recognize that training initiatives should be built for all members of the organization, not just those who are salaried employees. If we select and train people with well-established and consistently implemented guidelines, we greatly increase the potential for team building.

Beyond that, a common objective, a commitment to quality, a sincere concern for the team members, and a dedicated leader can cause wonderful things to happen. Volunteers who are shoddily intruded into an organization's processes or who are not well managed can create chaotic inconsistency in services. The additional, time, energy, and money needed to clean up well-intentioned but off-target volunteer efforts can quickly offset any gains provided by their services.

A Bad Use of Federal Dollars

Many nonprofit organizations find that at one point or another, they must address poor performance by a member of the organization. When that person is a paid member of the staff, dealing with the issue is in many respects no different than it would be in the for-profit world. Organizations of all types have a right to assume certain standards of performance from paid employees, and if that standard is not met, they should by all means take the steps necessary to ensure that they receive the necessary level of performance from that position, even if that means firing a poor worker.

The situation becomes more complex when the person is a volunteer, however.

The volunteer worker is an essential element of many nonprofit organizations, and the primary characteristics of volunteerism—selfless service—make it difficult to remove poor performers. In addition, insensitive handling of one volunteer can have a negative impact on other volunteers upon which your organization relies. Nonetheless, Kennedy stated that "volunteers should be held accountable just as though they were being paid top dollar to work. This does not mean that you can be careless about people's feelings.

Even for-profit managers have learned that managing and supervising requires certain social graces and sensitivity to every individual. However, the reluctance of nonprofit managers to hold volunteers accountable to reasonable levels of performance or to terminate bad volunteer relationships can be their downfall. Drucker noted that most nonprofits will, sooner or later, have to deal with people "who volunteer because they are profoundly lonely. When it works, these volunteers can do a great deal for the organization—and the organization, by giving them a community, gives even more back to them.

But sometimes these people for psychological or emotional reasons simply cannot work with other people; they are noisy, intrusive, abrasive, rude. Non-profit executives have to face up to that reality. Otherwise, other members of the organization, including the executive, will find that their capacity to contribute is diminished.

Not-For-Profit Manager and Executive Compensation Survey | SullivanCotter

Drucker agreed that dismissing an under-performing or otherwise undesirable volunteer can be a difficult task. You feel he or she is a comrade-in-arms and make all kinds of excuses," he granted. He contended that nonprofit managers should adhere to a basic guideline in such instances: "If they try, they deserve another chance.

An effective non-profit executive owes it to the organization to have a competent staff wherever performance is needed. To allow non-performers to stay on means letting down both the organization and the cause. As Ted Nicholas noted in The Complete Guide to Nonprofit Corporations, nonprofit corporations may establish fringe benefits programs for their employees. People that can be covered under these programs include not only staff personnel, but also directors and officers.

In addition, the benefits can be far more economical for the corporation and beneficial to the employees than any program that could be offered by unincorporated organizations. The nonprofit corporation can establish an employee pension and retirement income plan. It can provide for sick pay and vacation pay. It may arrange for group life, accident and health insurance coverage for its officers and employees. It can elect to cover its employees' personal medical expenses that are not covered by the group insurance plans, provided that the corporation can pay all or part of the cost of the various employee benefits it sets up.

It can require some contribution from the employees covered by the fringes. Bruce Hopkins observed in his Legal Guide to Starting and Managing a Nonprofit Organization that "there is a tendency in our society to expect employees of nonprofit organizations to work for levels and types of compensation that are less than those paid to employees of for-profit organizations. Somehow, the nonprofit characteristics of the organization become transferred to the 'nonprofit' employee.

Nonprofit eligibility

In fact, some nonprofit groups feel no obligation whatsoever to provide comparable levels of compensation in terms of salary, benefits, etc. Organizations that operate under these assumptions are short sighted and run the risk of losing out on many talented people. Indeed, Hopkins pointed out that "many nonprofit organizations, particularly the larger ones universities, hospitals, major charities, and trade associations , require sophisticated and talented employees.

Because these individuals are not likely to want to be 'nonprofit' employees, nonprofit and for-profit organizations compete for the same pool of talented persons. This competition extends not only to salaries but also to benefits and retirement programs. Experts indicate that although the compensation packages that are offered by nonprofit organizations are constrained by the so-called private inurement doctrine, which holds that the profits realized by a nonprofit organization can not be passed along to private individuals as dividends are passed along to shareholders in a for-profit enterprise , they can still offer attractive compensation packages to employees provided that they are judged to be "reasonable.

Excessive compensation can be penalized by imposition of additional taxes and fines, but the most damage to organizations who do this can often be found in the realm of reputation; few allegations are more damaging to a nonprofit organization's community standing than the charge that it is bestowing excessive compensation in the form of salary, country club memberships, etc.

Successful managers of nonprofit organizations recognize that the people who compose their organizations' work force—volunteers, employees, officers, and directors alike—are often participating in the group at least in part for altruistic reasons. Indeed, Drucker noted that "although successful business executives have learned that workers are not entirely motivated by paychecks or promotions—they need more—the need is even greater in non-profit institutions.

Even paid staff in these organizations need achievement, the satisfaction of service, or they become alienated and even hostile. After all, what's the point of working in a non-profit institution if one doesn't make a clear contribution? Leaders of nonprofit organizations, then, need to always be on the look out for ways in which they can show their paid staff, their volunteers, and their leadership how their involvement in the organization is making a difference, whether the group is involved with ministering to the economically disadvantaged or devoted to protecting a beloved natural resource.

As Father Leo Bartel, Vicar for Social Ministry of the Catholic Diocese of Rockford, Illinois, told Drucker, "We give [volunteers] opportunities to deepen in themselves and in each other the sense of how important the things are that they are doing. Bray, Ilona M. Nolo, March Drucker, Peter F. Managing the Non-profit Organization: Principles and Practices. Reprint Edition.

What's the Profit in Nonprofits? - Areva Martin - TEDxCrenshaw

Collins, Hopkins, Bruce R. Second Edition.

Compensation In Nonprofits

They are free to pay them whatever they want. After all, the rationale for tax-exempt status is to promote a public purpose.

Helping to generate inequality by paying excessive executive salaries is not a public purpose. Does a charity really want to tell us that no one who was competent was prepared to make the sacrifice of working for pay that is far more than what 99 percent of other workers make, that is 30 times the median wage, that is more than 90 times the annual earnings of a minimum wage worker?

If working for this nonprofit at that pay is too great a sacrifice, then perhaps this is not the sort of organization that taxpayers should be supporting. Having worked in Washington, D. Some of them receive less than one-quarter of this pay. In addition to the president, many other people in top-level positions at Harvard earn salaries in the high hundreds of thousands of dollars, including the provost, college deans, vice presidents, and other executives.

That would be a very nice holiday bonus. If this pay-cap policy were adopted, some organizations would inevitably try to circumvent it. One route would be to contract out for services. The point is to change policy, not assuage liberals concerned about inequality. Such organizations are simply ineligible for the tax subsidy. The same point should apply to organizations that find they cannot get good help for the same pay as the president of the United States earns.

CEOs and other top executives in nonprofits may legitimately argue that they are grossly underpaid compared with their counterparts in the corporate sector. This would be true.


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Corporate CEO pay has become bloated due to a badly broken corporate governance system that essentially allows CEOs to rip off shareholders. In fact, every worker is underpaid in relation to the bloated pay of corporate CEOs, so top executives in the nonprofit sector are not uniquely disadvantaged in this respect. As a practical matter, if we are serious about combating inequality, we have to recognize that we are not going to reverse a four-decade-long trend with a single step. If the beneficiaries of the policies that promoted inequality can protect their position by pointing to some other group that got even larger gains, then we will never be able to make any progress.

In this case, we should keep our eye on the ball. The federal government is providing enormous subsidies to the bloated pay of top executives at nonprofits. This is simply not a good use of federal dollars, and it is hardly in keeping with the idea that nonprofits should be serving a public purpose. We can try to develop government policies to reverse market outcomes that generate inequality, but we should first end government policies that promote inequality.

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