Nonprofit Staff Retention, Part 1: Are Higher Salaries Really the Answer?

In surveys of nonprofits, staff retention is often reported as one of the top challenges. Some researchers estimate that the average fundraiser will leave their position every 16 to 18 months, costing nonprofits potentially hundreds of thousands of dollars in hiring and training new employees.

In this first part of our blog series on nonprofit staff retention, we’ll look at the reasons why nonprofit employees leave their jobs, and we’ll offer suggestions for what your nonprofit can do to decrease employee turnover and retain your best staff members. Part 2 will examine a key benefit that already exists within your nonprofit which will help you attract and keep the best employees.

The most recent Nonprofit Employment Practices Survey from Nonprofit HR found the annual staff turnover rate for nonprofits is 19% (compared to 17.8% for all industries). To put that in perspective, nonprofits have roughly the same turnover rate as healthcare employees, a group known for high rates of burnout.

According to a Chronicle of Philanthropy survey of 1,035 fundraisers in the United States and Canada, 51% of fundraisers said they will leave their current nonprofit within 2 years, and 30% said they plan to leave fundraising altogether.

There are many reasons why turnover is so high in the nonprofit arena. Nonprofit employees report excessive workloads, lack of career development, and no opportunity for upward mobility as factors in their decision to quit. In addition, too much pressure to meet unrealistic goals and a toxic or frustrating organizational culture frequently drive nonprofit staff out the door.

But the number one reason employees at nonprofits give for leaving their jobs… can you guess?

Being underpaid. In fact, according to Chronicle’s survey, 26% of fundraisers who haven’t left their jobs are currently dissatisfied with their salaries. If nonprofit employers don’t act soon, this problem will only get worse.

What’s the solution? Some argue that nonprofits must pay their leaders and employees the kinds of salaries they can get at a tech start-up. But the fact is, most nonprofits don’t have the budget to compete with the private sector on salary. Does that mean you have to settle for less talented, less committed staff? Not so fast.

Why Nonprofit Employees Quit

When you dig beneath the surface, you see that this singular focus on salary is an oversimplification of a complex system of interrelated factors that go into an employee’s decision to leave or stay. It seems that once salaries exceed the living wage threshold, it’s the nature of the job and the toll it takes that leads to an employee’s decision to quit. Consider these four factors:

1. Burnout

In the Chronicle of Philanthropy survey, 84% of fundraisers said they feel “tremendous pressure to succeed.” 27% of those who are likely to leave fundraising in two years cite unreasonable goals as a key reason. And 36% said they’re dissatisfied with the support they get from their boards.

With more and more charities entering the field, competition for donor dollars puts incredible pressure on fundraisers. There’s a feeling that they are expected to hit unrealistic fundraising goals all alone, with little understanding from leadership of what it takes to build relationships and cultivate donors over time.

Burnout is a problem for other nonprofit staff, too. Direct services staff are often asked to work long hours with no overtime. Even when long hours aren’t required, many nonprofit employees will give more of themselves than is healthy out of an intrinsic desire to do good. Either way, the result is the same — burnout.

2. Lack of Benefits

Perks found at many for-profit organizations are often lacking at nonprofits. According to the Chronicle survey, one quarter of respondents said they’re dissatisfied with their access to professional development. 34% said they’re dissatisfied with their access to leadership training; that number jumps to 61% for those who recently left fundraising jobs. On the whole, 1 in 5 respondents said the negatives of their jobs outweigh the benefits.

3. No Career Advancement

Many fundraisers leave their jobs because the only way to move up is to move out. 85% of those surveyed who left jobs recently said they were dissatisfied with their prospects for promotion. When nonprofit employees are promoted from within, they’re rarely given the training they need to succeed in their new position, which just makes a bad situation worse.

4. Toxic Culture and Betrayal

People who go into fundraising and nonprofit work are often motivated by a strong desire to make the world a better place. They see the organizations they join as a force for good. But when the internal culture is toxic — ineffective leadership, dysfunctional managers, and long hours — that contrast between the nonprofit’s outward mission and its internal culture creates a feeling of disillusionment and even betrayal.

With any combination of these four factors diminishing the employee’s work experience, it’s easy for salary to be the scapegoat: “I don’t get paid enough for this.” Sometimes salary is a factor, but it can’t be used to mask other serious work environment problems at nonprofits.

When Salary Matters … And When It Doesn’t

As a rule, people don’t work for nonprofits to get rich. Rarely does salary alone attract a person to work at a nonprofit or keep them there. That said, employees need a living wage. Consider the situation in Santa Cruz County, California.

In January, the Human Care Alliance reported that 6 in 10 nonprofit workers in Santa Cruz County needed to work a second job to make ends meet. They concluded that the wage inequalities at these organizations “is contributing to the systems of poverty that nonprofits are working to alleviate.”

When a nonprofit relies on low salaries to keep its doors open, it creates an unsustainable financial situation that not only drives talented staff away but ultimately undermines its mission and jeopardizes those who depend on its services.

If your nonprofit feels forced to choose between your clients and your employees, you must prioritize sound fundraising principles to secure long-term financial stability that meets the needs of both groups: clients and staff.

Assuming that is not the case and your nonprofit has the budget to pay its employees a living wage while providing direct services to clients, how can you make the work experience at your nonprofit more rewarding for you employees without raising salaries? In other words, what do your employees really want?

A recent survey of 1,000 nonprofit employees by Bloomerang confirms the data from the Chronicle of Philanthropy survey and offers insight into what employees want most from the nonprofits they work for.

While higher salaries was a common response, paid time off and paid family leave were actually ranked higher. Paid overtime, retirement savings, pension, and health insurance quality were also in the top ten responses.

Other workplace qualities that mattered most to nonprofit employees are work schedule flexibility, telecommuting, and supportive leadership. These benefits are not only good for staff retention, they cost nothing; in some cases like with telecommuting, they can even save your nonprofit money.

For example, a Stanford study found that working from home not only decreased employee attrition by 50%, but created a boost in productivity equivalent to another full day of work. That extra productivity could free up dollars in the budget for additional benefits like overtime, family leave, tuition reimbursement, and more. And that’s before factoring in potential savings from downsizing your office space and other benefits of having fewer on-site employees.

Granted, it may take time to transform your office culture, institute telecommuting policies, or deliver more robust benefits to your staff. But if you take a close look at what your employees really care about, you can find ways to make them happier and keep them around longer than higher salaries will.

In fact, there’s one thing that already exists within your nonprofit that can make all the difference for an employee who is questioning whether or not they should stay: A greater sense of purpose and meaning in their work. This will be the subject of Part 2.