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Do nonprofit executives make too much? The answer is yes and no. Yes, because some nonprofit executives are way overpaid for the amount of value they bring to their organizations. No, because some nonprofit executives bring more value to their organizations than they are paid.

The worst thing a Board of Directors can do is pay a nonprofit executive based on his work experience, number of college degrees, and how much he made at his last job. The amount of money a nonprofit executive should be paid is a little less than the amount of value he brings to the organization. Value doesn't have to strictly be a dollar figure, which is often the only factor a nonprofit executive is measured on by the Board. I'm labeling the word "value" as what the nonprofit executive is bringing to the table for his nonprofit organization. Is he developing and equipping the younger leaders to lead, fundraise, and create change in the organization? Is the nonprofit executive working closely with other nonprofit executives developing teamwork collaborations? It also boils down to what the is doing with the money he is paid. Is he spending it on a BMW, or is he taking possible donors out to lunch everyday on his own dime? Is he investing that money back into an endowment which will benefit the organization at a later date after he is gone?

I once heard a nonprofit employee complain that she had been at her organization longer than anyone else working there, yet she was being paid less than anyone else. To be frank, the worst thing you can do is base someone's salary off of how long they have been at an organization. You determine a person's salary off of how much value they bring to the organization, and that's it! I will do my best to give a couple of quick scenarios to see if a nonprofit executive is making too much.

A nonprofit executive makes too much when he isn't bringing as much value to the organization as he is being paid; if he is causing more problems than solving solutions; and if he is not focused on developing strategic alliances with business people and other nonprofit organizations in the community.

A nonprofit executive isn't making too much when he brings and adds more value to the organization than he is being paid. Is the nonprofit executive effectively leading his team and developing his ability to lead others? Is he out working hard to develop relationships in the business community that can help fulfill the mission of the organization?

I might be making this a simpler than it is, but nonprofit executives aren't paid to much, only if they're bringing more value to the organization than they are paid.

Learn more about this author, Christopher Scott.
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