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    October 31, 2023 HUMAN RIGHTS

    Salary Transparency, Morality, and the Fight for Equitable Pay in the Nonprofit World

    by Sara Shapiro-Plevan

    One might think that nonprofits rooted in religious values might align their internal practices with those values, too. After all, integrity is a big buzzword that we love to bandy around, and organizational leaders tend to believe that “values” mean a great deal to both constituents and donors alike. For nonprofits centered around Judeo-Christian ethics, guided by biblical texts that cite the value of paying workers ethically and on time (see Leviticus 19 or Deuteronomy 24), it appears difficult to match lived practice with espoused values. At the same time, we know that nonprofits have had a long and complicated history with compensation, and no matter what values may show up on plaques inside the front halls of buildings, what sacred texts may say, and even what employee handbooks may back up, it is deeply held convictions, biases, and internalized stereotypes that tend to change the way leaders practice at work. And because the financial bottom line is always top of mind, nonprofit leaders tend to spend available resources on impact, not salaries.

    The nonprofit sector offers a startling imbalance between the C-suite and the workforce, where the workforce is predominantly female and the leadership is predominantly male. Women represent approximately 70 percent of all employees and, in some sub-sectors of the nonprofit space, as many as 45 percent of all CEOs.

    So many who benefit from or are engaged in the work of nonprofits tend to believe that values-based and religious nonprofits are doing “God’s work” or mission-driven work, and that those in this sector receive such incredible joy and satisfaction from their work that this suffices as compensation for their efforts. This is in part based on the host of sexist stereotypes of the sector’s largely female workforce and a foundational belief that church workers don’t need (and aren’t worth) higher salaries—because they are motivated by that sacred calling. It is time to let these dated, sexist stereotypes go. 

    In 2021, a study of executive compensation at nonprofits identified that women in executive roles earned nine percent less than men.

    In 2021, a study of executive compensation at nonprofits identified that women in executive roles earned nine percent less than men.

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    As entrepreneur and philanthropist Dan Palotta teaches, we have confused frugality with morality. Our American Puritan values have convinced the professional and volunteer leadership of nonprofits to believe that they must allocate the maximum dollars and resources available for their cause, whether that be religious education, alleviating poverty and hunger, or the wage gap. They should not devote financial resources to the people doing the work, but only devote financial resources to those in need. This approach no longer works. It is time to abandon those Puritan values, as they belong to another time and previous generations, their assumptions, wealth, and privilege.

    In 2021, a study of executive compensation at nonprofits identified that women earned 9 percent less than men: these are the individuals who lead and staff this vital work serving our communities. This is no longer just attributable to confusing frugality with morality; this is simply evidence of pay inequities in compensation, the absence of pay equity audits, and a commitment to challenging gender bias (and for that matter, other biases) when it gets in the way of honoring employees and paying them equitably. And that’s not even the wage gap in the nonprofit workforce, where caregivers and social workers staffing human service agencies, early childhood educators at nonprofit childcare centers, and clergy leading religious community organizations, many of whom are making well below thriving wages. This is a true conflation of values and compensation philosophy, to the employees’ detriment. Perhaps it is time to refocus our attention and consider the gender wage gap affecting the female majority of employees of these nonprofit organizations. By addressing the gender wage gap, our nonprofits then too can accept that women have been socialized not to negotiate, beginning with their first salaries. At that moment of initial negotiation, an “ask gap” opens that continues throughout their lives, contributing to growing wage gaps over a lifetime. Wage gaps in nonprofits can grow more when women are able to negotiate, in part because women are socialized not to negotiate effectively or in ways that tap into negotiation from an empathetic, relational approach. Closing the gender wage gap in nonprofit spaces includes not only rectifying the factors that contribute to the wage gap itself but also supporting women on their own learning journeys, becoming effective negotiators, and negotiating not just on behalf of others but on their own behalf.

    Based on today’s wage gap, white women beginning work in 2023 now stand to lose $556,200 over the course of a 40-year career compared to white, non-Hispanic men. For Black and Asian, Asian American, or Pacific Islander women, the losses are nearly $1 million over their lifetimes, and for Latinas and Native women, the losses are over $1 million, meaning that they will have to work well into their 80s to make what a white man would make and be able to retire by age 62. This is what happens when women do not, or cannot, negotiate, and when their employers confuse frugality with morality and pay them less than they deserve because they believe implicitly their husbands, sons, and colleagues should be paid more, simply by virtue of their gender or by virtue of the work they have chosen to do.

    What are these women losing? It isn’t just cash in hand. It is equity. Perhaps it’s equity in a home, or the ability to pay a mortgage, to consider buying a home, or even their ability to pay rent. This money represents the money to be able to pay for health insurance, for one’s self and one’s family, for life-saving treatments, or for unforeseen medical bills. It represents the money that might be used, someday, for a college or graduate education—the chance to grow through learning. This money could be used to enable a woman to be financially secure enough to get a divorce and to keep a woman safe by leaving an abusive spouse. And it can be used for caregiving, to take care of children (paying for the high costs of daycare) or parents and other family members (the also high costs of long-term care, caregivers, and nursing homes). And do not forget some of the other things that an extra half a million or million dollars might pay for, what is taboo, too: the chance to have children, to harvesting one’s eggs or for fertility treatments, or to take time off with a financial cushion while having small children, or the choice to not have children, too, who might be able to thus offer financial support as one ages.

    Hand in hand with the closing of the wage gap are the important steps that many of our states are taking to address the issue of salary or pay transparency so that negotiation becomes easier. States like New York, California, Colorado, and Washington have made it possible for women, people of color, LGBTQ+ people, and others from historically marginalized communities to know exactly what salary ranges are for open positions so that they can negotiate more effectively and eliminate the ask gap. Women who work in nonprofits in these states and other localities that have embraced this meaningful step toward equity can benefit from some elimination of biases and barriers in their job search and hiring processes, leveling the playing field, and remedying pay inequities from the outset. And still, nonprofits are often reluctant to embrace salary transparency when they are not forced to do so by law; it feels hard to narrow that frugality-morality gap, and many are eager to take advantage of loopholes afforded them by religious exemptions, not yet convinced that the trust and transparency that they are offering to their employees might be a valuable benefit.

    Closing the wage gap from the very beginning of her career means that a woman just beginning her career in 2023 stands to lose hundreds of thousands of dollars between now and her retirement, preventing her from caring for herself, providing for her family, and undermining her long-term financial security as well as those who depend on her. This devalues women, in their own eyes, in the eyes of their colleagues, and in the eyes of our society. The nonprofit sector penalizes its female-identifying employees, the huge number of women who make up the vast number of employees working in this space, by preventing them from earning thriving wages. The effect then trickles down and out to affect not just these women but all who depend on them, thus creating a vicious cycle where the women who serve these nonprofits then are potentially positioned to be in need themselves.

    It’s time to end the frugality versus morality debate and start to invest in the people who make nonprofits possible. Labor protections like the National Labor Relations Act are often unknown to employees of nonprofits, and many are deeply influenced by their employers, who suggest both subtly and not-so-subtly that their employees are forbidden to talk about salaries, forbidden to ask colleagues how much they make, and forbidden to unionize. If nonprofits want to truly strive for the integrity afforded to them (and demanded of them) by law, and the integrity that will make them most appealing to donors and constituents alike, ethical behavior that enriches their communities as a whole will have a most profound impact. Values-driven organizations are guided not just by their mission and vision statements but out of a very real desire to change the world around them. It is time to begin working with true integrity, from the inside out. 

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    Sara Shapiro-Plevan, Ed.D.,

    CEO of The Gender Equity in Hiring Project

    Sara Shapiro-Plevan, Ed.D., is the CEO of The Gender Equity in Hiring Project, where she works to challenge gender biases in hiring and employment processes throughout Jewish organizational life to help women and people of all genders rise to positions of leadership.