How Not-For-Profits Are Riding Out the Recession

In the April issue of Monday Developments, Curtis Grund, vice president of ORC’s global development sector consulting practice, outlines how not-for-profit organizations are reshaping their compensation programs to ride out the recession. Dependent on donors and answerable to a variety of stakeholders, nonprofits are accustomed to assiduous stewardship of their assets, and current economic circumstances and increased government scrutiny of executive compensation have heightened the need for careful management of compensation.

The mission-focused culture of nonprofits makes this easier to some degree. Employees are attracted to the work and remain with the organization because of their commitment to its goals, not to earn large salaries. Nonetheless, nonprofits have been increasing pay over recent years to become more competitive, which may make it a bit easier for them to put on the breaks now. An ORC survey found that nonprofits are more likely to freeze salaries or delay increases than for-profit companies. On the other hand, 33 percent of profit-making companies have reduced their merit increase budgets, compared with only 19 percent of nonprofits. This may be because nonprofits typically have less room in their budgets for cutting to begin with.

The full article can be downloaded at interaction.org. For more information on compensation practices in the global development sector, contact Curtis Grund, +1 212 8520354