Does Compensation Keep a Nonprofit CEO?

Nonprofit retention is a hot topic right now, and with good reason! Current nonprofit employment data tells us that voluntary turnover for nonprofit employees is at 19%, compared to a national average of 12% for the entire US labor market. And while this is across all levels of nonprofit employees, we have all witnessed that burnout at the top is especially prevalent. 

An executive leader clicking on “Compensation” on a screen.

As a result, many organizations are beginning to seriously evaluate what kind of measures can reduce turnover among nonprofit executives.  ​

​Improving Nonprofit Retention
Our 2022 Nonprofit Executive Search Summary identified some of these types of measures, which included:

• Hiring smarter
• Increasing compensation
• Providing greater compensation transparency
• Eliminating the need for in-person work
• Offering leadership coaching

And yet, compensation continues to be the main talking point in this list for most organizations. When our team of nonprofit executive recruiters is working with search clients or our team of nonprofit leaders is acting in a board advisory role, we hear people asking questions about compensation all the time. They always want to know how much money they need to offer to convince their CEO/ED to stick around, which begs the question, “Does compensation alone keep a good nonprofit CEO?”

Is It All About the Money?
Asking whether a nonprofit CEO needs appropriate compensation to stay with an organization is like asking whether a fish needs water. Of course a fish needs water to survive. But it doesn’t just need water. It also needs food to eat, plants to hide it from predators, and the right temperature for it to thrive. A fish needs water, but water alone will not keep a fish alive.

In the same way, nonprofit CEOs need appropriate compensation for the job they’re doing. Their pay should comfortably cover the cost of living where they are located and should adequately reflect what is expected of them in their role. However, simply bumping up a CEO’s salary does not ensure that they will stay. Salary is only one piece of the puzzle when it comes to hiring and retaining a nonprofit CEO or Executive Director. The bigger picture must include:

• A mission they believe in (and visible progress towards achieving it)
• An organization that makes a real difference in the community
• The right resources (both human and financial) to be successful in the role
• A say in the organization’s strategic plan
• Genuine support from the board (note: there won’t always be agreement, but there should always be respect through times of progress as well as setbacks)
• Work-life balance
• True partnership between the board and staff
• Organizational alignment
• Passionate donors
• Dedicated staff
• Strong partnerships with other adjacent organizations
• Community support
• An appreciation of diversity

Essentially, what makes a nonprofit great as an organization will also keep a top CEO/ED, so focusing on fostering these elements will not only retain top leadership talent but also improve the organization. This is an unstoppable combination: sustained strong leadership and a healthy organization.

Determining Compensation
If you need help determining how much to pay your CEO or Executive Director, check out our resource The Nonprofit Compensation Guide for more information on nonprofit compensation models and advice on how to do a salary comparison analysis. It also contains great information on what kind of salary issues need to be considered to ensure equity in the role. 

Next Steps
When you need help hiring a nonprofit CEO, please reach out to us. Our team of experienced nonprofit recruiters has the skills needed to find just the right leader for your organization. We have decades of expertise in matching nonprofit professionals with organizations that can benefit from their leadership skills and lived experience. Contact us today to find out more!