Very simply put, good people are allowed to be paid 6 figures as well. Just because they aren't working for investors does not mean they should take a pay cut. .
So just how much of a difference is there when it comes to CEO pay of nonprofits and those of organizations who profit for investors? The average compensation package of a CEO of an S&P 500 company was $9.7 million, $9 million more than the average pay of the largest nonprofits. As pointed out above, the largest nonprofits pay their CEO a little over $500,000 on average. So it turns out that CEOs of nonprofits are in fact taking a heavy pay cut if they decide to join a nonprofit. If nonprofits want to attract the most talented people they must be willing to pay executives a large amount of money. If you fail to retain a talented CEO, the charity may lose sight of its mission and funds may diminish. For this reason, nonprofits may need to increase their CEOs salary to prevent their departure to an industry that pays millions for the same exact job. .
Now that the salary gap between the nonprofit and for profit CEOs is recognized, we must ask ourselves if theres a gap between the amounts of time put in, work done, or education achieved. The men and women running nonprofits usually have a graduate degree, 15 years of industry experience, great communication skills, and the ability to lead. These are the same exact requirements for the men and women that run for profit organizations. They both put in over 40 hours a week while working towards the companys mission statement. Our society must realize that just because nonprofits are in existence for the greater good does not mean people should not be paid fairly for their time. Just because the work is charitable does not mean their work is less complex than for profit CEOs. Nonprofits will not retain the best leaders if they cannot pay a healthy package. .
Donors need to be aware of the potential leadership gap that may occur when today's nonprofit CEOs retire.