Q: 

"I serve on the board of a small nonprofit where staff compensation has been pretty flat for years, apart from a few very modest cost-of-living increases. We care deeply about our team and want to live our values around equity and decent work. But the reality is that our finances are tight. Most of our funding is project-based and doesn’t leave much room for wage increases or new benefits.

As a board, we want to do better. But when we talk about improving working conditions, it often feels like we hit a wall. We don’t want to just shrug and say, “We can’t afford it,” but we also don’t want to make promises we can’t keep. So how do we make progress on compensation in a way that’s responsible and sustainable?"

A:

These are really important questions, and I’m so glad you’re asking them. So many boards end up in this place; in principle, they value decent work and fair compensation, but in practice, those values don’t get reflected in the budget. While I fully understand the messed-up reality of the nonprofit funding landscape, I’m tired of hearing excuses about decent work. Because the reality is that nonprofit organizations get to determine their own compensation structure. 

But year after year, boards decide that it’s okay to underpay staff in the pursuit of the ‘mission’. The word that we use to describe this situation is exploitation, and whether you’re doing it because you don’t value workers, or because you don’t have the funds, the impact is the same.

Why do we continue to exploit nonprofit workers?

There has been no shortage of data shared on the stark, shameful reality of nonprofit compensation. Most recently, Imagine Canada reflected the racialized and gendered pay gaps across the nonprofit sector in their ‘People First’ report, and Future of Good’s Changemaker Wellbeing Index highlighted the alarming rates of food insecurity faced by nonprofit workers. This data is valuable but the trends aren’t new; we’ve been talking about this for years (and years and years). So why haven’t we made serious progress on compensation for nonprofit workers? 

It’s not just financial challenges that are holding us back - there are systemic cultural norms in the nonprofit sector that get in the way of decent work. Here are a few that I frequently see showing up in my work with nonprofits: 

• We undervalue care work. Nonprofit work is built on emotional and relational labour that’s often treated as invisible or secondary. Because this labour is largely done by a feminized and racialized workforce, undervaluing it reinforces the very inequities many nonprofits aim to address.
• We’re stuck in a charity mindset. Boards often operate from a place of scarcity, assuming that low wages are the cost of doing good - or even subscribing to the belief that fair compensation is somehow morally questionable.
• There’s a class divide. In many organizations, board members hold vastly more class privilege than staff and may have biases about what nonprofit workers “should” earn or sacrifice.
• We make assumptions. We assume our staff live in dual-income households. That they’re doing this for passion, not pay. That impact work should come with personal sacrifice. These assumptions help justify low pay across the sector.

With or without budget constraints, these dynamics shape how boards think and talk about compensation. The first step to moving past your board’s impasse on decent work is to have some hard conversations about the biases, beliefs and assumptions influencing your director’s perspectives. Surface these tensions, challenge them, and then move into a conversation about money. Otherwise, ‘budget constraints’ becomes a convenient excuse to continue the status quo without any real engagement in the underlying causes of exploitation, or an acknowledgement of the board’s true agency in this issue. Because no matter what your budget is, there are always some concrete things you can do to advance decent work in your organization. 

Practical ways to advance decent work on a tight budget

Be honest about compensation.

Start by naming the gap. If staff are underpaid, acknowledge it clearly and directly, and don’t dress it up as “lean operations” or “dedicated staff.” Be real about the numbers. How underpaid are your staff? Sometimes the top-up needed to get to a living wage (the absolute floor for any organization’s compensation) or competitive pay is less than you might think. Do some compensation research, and look for a breadth of comparators that go beyond the nonprofit sector; nonprofits have to compete against public and private employers for staff. When looking for comparable roles, don’t get too caught up in job titles. In organizations where staff ‘wear many hats’, look for compensation that aligns with their ‘highest-valued’ or most senior responsibilities - your Communications Director may schedule social media posts, but they are also providing senior-level marketing strategy and supervising vendors.

Take the time to understand the numbers from your staff perspective as well. ‘Average’ or sector-based compensation benchmarks may not actually be liveable in your region. Are your staff experiencing financial distress? Are they actively looking for a better paying job? What would they consider ‘good’ or ‘competitive’ pay?

Recognizing the risks and costs of exploitation for the organization is another important part of this conversation. I have seen boards reluctant to tap into resources to top up staff pay, only to be forced to do it reactively when they needed to invest in an interim ED. There’s no doubt about the ethics of fair compensation, but it is also a prudent approach to ensure sustainability for your organization. 

Develop a compensation framework.

A compensation framework is more than just a salary chart, it’s a foundational governance tool that defines how your organization approaches pay. For any nonprofit with paid staff, a compensation framework is essential infrastructure. It reduces ambiguity, promotes fairness, and ensures that compensation decisions reflect your organization’s values, and not just your budget constraints.

Without a clear framework, compensation decisions often happen on a case-by-case basis, which can lead to inconsistencies, inequities, and mistrust. A well-developed framework brings transparency, helps mitigate bias, and supports long-term sustainability by linking financial planning with staffing realities.

A compensation framework typically includes the following components:

• Compensation Philosophy: This is your organization’s guiding statement on compensation. It outlines the principles and lenses that inform how you make decisions about pay and benefits. Your philosophy might reflect values like equity, transparency, financial responsibility, or a commitment to decent work. This statement can serve as a compass when you’re faced with hard choices or limited options.
• Compensation Policies: Policies establish consistent internal standards for how compensation is determined, adjusted, and reviewed. You’ll want policies to guide things like: how new salaries are set, when and how salary reviews occur, the process for applying cost-of-living increases or merit-based adjustments, and how the organization addresses pay equity (e.g., limits on salary differentials between highest- and lowest-paid staff).
• Salary Bands or Pay Ranges: Defined salary bands provide structure to your compensation system by outlining the expected pay range for each role or job level. This helps promote transparency and consistency, reduce wage inequalities, and provide a clear roadmap for staff to understand their opportunities for compensation increases. And for an organization that wants to increase compensation intentionally, having formally structured salary bands can be a valuable negotiating tool with funders.
• Multi-Year Development Plan: If your current compensation structure isn’t fair, competitive, or sustainable, you may not be able to fix it overnight, but you do need a plan to address the issue. A development plan in your compensation framework will  outline where your compensation falls short, where you want to get to, how you’ll get there over time, and what conditions or funding shifts will enable progress. This shows your team and your board that you’re serious about building toward decent work, even if you’re not there yet, and it can be a powerful tool for conversations with donors and funders.

Have some hard conversations

If your board really values decent work, then you need to be ready to advocate for it with your funders and donors. Get loud about the real costs of nonprofit work, advocate for increases in unrestricted or core funding envelopes, and negotiate for better coverage of staffing costs in your project budgets. Having some boilerplate messaging that you can turn to for grant applications can streamline this process, and make sure that you touch on these messages in all of your grant reports. Schedule calls or meetings with funders to talk about the challenges of funding decent work, and be ready to confidently make the case that staffing is a core part of your impact. Sharing your compensation framework can be a helpful way to support your advocacy.

Be intentional and strategic about educating your donors. Push back on the overhead myth, and share stories about the people behind the work - their expertise and experience is a core part of your value proposition. Invite donors to contribute in unrestricted ways, or ensure that program budgets reflect the reality of direct and indirect staffing costs. There are many resources and fund development professionals out there that share valuable insight into this approach - I am always learning from Maria Rio, Sadé Dozan, and Esther Saehyun Lee.

Build a decent workplace

There are many low or no-cost things organizations can do to build an environment that supports decent work. The Ontario Nonprofit Network offers a helpful decent work checklist that includes areas like contract security, scheduling and conflict resolution as critical aspects of decent work. Can you move away from short-term contracts? Is there a way to develop policies or provide training related to mediation or conflict management for staff? Can you offer better flexibility around scheduling, more sick days, increased vacation time, or time for professional development? If you can’t raise pay, can you adjust the workweek? Fewer hours at the same rate can be a meaningful move toward decent work, without increasing your budget.

What to do when the numbers don’t add up

So what if there truly is no way for you to find the budget for fair compensation? When boards say that they really want to advance decent work, but they can’t afford it, I think they’ve already identified the solution. If you can’t afford to pay your staff fairly, if you don’t see a viable path for increasing and maintaining fair compensation over time, then your business model isn’t sustainable. So you can either find additional resources, or you can change your staffing model. 

I think more and more boards will be facing this reality in the coming years. It’s tough, and it’s unfair, and it will hit the sector inequitably. Boards who are proactive will need to invest in resource development and find creative ways to leverage outsourcing and partnerships to stretch budgets, but they may still need to make hard calls about reducing staff teams and engaging in mergers to streamline back-office and admin costs. 

The boards who aren’t proactive will be dealing with constant staff attrition, making it more and more challenging to advance core purpose or become sustainable. They’ll be stuck in a downward spiral, waving their hands around and shouting, ‘But our funders didn’t give us more money for salaries!’ Don’t be that board!  

The funding landscape is undeniably tough, especially for smaller organizations and those led by or serving marginalized communities. But your organization’s workplace culture and compensation practices are not dictated by your funders. They are determined by your board. Budget constraints are real, but they’re not an excuse for exploitation. You get to decide how your staff are paid! And that means boards need to own that responsibility, even when it leads to tough calls.

Big Takeaways

• Fair compensation is a governance issue. Boards have a responsibility to ensure their values show up in the budget, not just in platitudes.
  
  
• Decent work is possible, even with limited resources. Transparency, planning, and creativity go a long way toward building a fair and sustainable workplace.
  
  
• If your model can’t sustain fair pay, it’s time to change the model. Boards must confront hard truths and make structural decisions that align with equity and sustainability.