Social Currency

Ed. note: A version of this post appeared on the ASU Lodestar Center blog. 

We often talk about nonprofit executive compensation in skeptical terms: how much is too much? While no one supports wasteful public spending or abuse of power, the cases that grab headlines and provoke legislation are actually far from the norm. At Nonprofit Finance Fund (NFF), what we see more often is staff turnover due to burnout and low pay. We routinely work with nonprofits that are struggling to determine if it’s financially possible to make a much-needed new hire, even on a part-time or contractor basis. The following post explores a range of new data from the field about our sector’s human resources—often, our most powerful but undervalued form of capital.

First up: The Chronicle of Philanthropy’s recent survey  of more than 900 young nonprofit professionals. With help from the Nonprofit Leadership Alliance and the Young Nonprofit Professionals Network (YNPN), The Chronicle found that many of the sector’s young workers “can’t afford to stay in their positions” because their salaries (often starting out in the $25 to $35,000 range) are no match for their student debt. Over time, low pay has real consequences for the sector in terms of talent. Case in point, YNPN’s 2011 survey of young nonprofit workers found that “commitment to remaining in a nonprofit job weakened as employees got older.” When asked to indicate the reason for leaving, over 90% of respondents cited burnout, although low salary and wages (82%), lack of career advancement (69%), and job related stress (69%) were also major contributors.

A certain amount of turnover is natural and to be expected. Life happens. Things change. But there are real program and financial dangers inherent to “churn” –i.e., spending precious time and resources searching for, interviewing, hiring, and training new candidates in the face of cyclical employee turnover. Simply put, well-trained staffers produce better mission outcomes; a new staff member will never be as effective as one who’s been in the job for a year. While their salaries may grow over time, there are countless efficiencies that can result from retention, not least of which is decreasing the administrative and financial burdens of employee attrition.

So why does churn seem so common to our sector?