Want to take your nonprofit from your passion project to your full time job?
Yes, it’s possible to make a living running a nonprofit organization that you started from the ground up—but keep in mind these important considerations before taking the leap.
Signs You May be Ready to Turn Nonprofit Leadership into a Full Time Job
Volunteer work is no longer cutting it. It’s not uncommon for nonprofits to be fully or primarily led by passionate volunteers, many of whom have entirely separate day jobs. But there can come a time when a team of part-time volunteers can no longer effectively carry out the week-to-week responsibilities it takes to run programs, complete administrative tasks, or fulfill other obligations that come with running a tax-exempt organization. Plus, many types of nonprofits need paid employees to effectively carry out their mission (for example, organizations that serve domestic violence survivors will often have social workers on staff) and at this point in a nonprofit’s lifespan it’s helpful to have a full-time employee leading the pack.
Keep a finger on the pulse of your organization’s needs. Is the volume of work exceeding the time volunteers can realistically spend on your nonprofit’s programs? Are you hoping to operate during business hours and need to be accessible during the day?
The nonprofit’s revenue can support a stable salary. Many nonprofit leaders start their organizations using their own seed money, and not everyone has the financial margin to make such an investment and rely on a salary from their organization if the cash flow isn’t consistent yet. After evaluating your nonprofits expenses vs. its revenue, if it makes financial sense for you to cut yourself a paycheck, it can prove to be a worthwhile decision that ends up making your nonprofit more funds long-term.
You’ll be taking your nonprofit’s gross revenue into consideration, so be on the lookout for additional nonprofit exemptions and discounts, as well as other ways to bring in revenue in addition to your fundraising efforts. And keep in mind that if your organization brings in $50,000 a year in revenue and you want a $50,000 salary, you’re out of luck. You’ll need to make sure your nonprofit’s other expenses are taken care of, such as the cost to run programs, purchase supplies, and pay rent if you have a brick and mortar space.
You have support and resources, personally and professionally. Let’s be perfectly honest—nonprofit leadership is no walk in the park. You’ll need to develop real skills in management and stewarding resources effectively. The book Decisive by Chip and Dan Heath (a must-read for the whole Charitable Allies team) recommends finding leaders who have solved similar problems before. For example, another person who has started and grown a nonprofit organization can be a great resource to you as you navigate new waters. They can provide helpful advice along the way because they’ve been there themselves and might be able to help you avoid common mistakes.
If you have a community of coaches and cheerleaders who can offer helpful resources and mentorship, you’ve invested time in professional development, and you’re committed to your role, you’ve got half of what it takes to succeed.
How to become a full-time nonprofit leader
When the time comes to make your life’s calling your career, your board will be instrumental in bringing this big step to fruition.
This is because no nonprofit founder, regardless of the amount of time, money, and energy spent into starting the nonprofit, “owns” the organization. In the nonprofit sector, organizations are governed by the board of directors, so founders do not have inherent authority. Rather, authority is always granted by the board.
Due to conflict of interest concerns, you won’t be able to vote on the decision yourself, assuming you’re on the board of directors. Instead, your board will look into “comparibility data” to determine a reasonable salary for your role. Reasonable compensation is determined by looking at other organizations of a similar size, mission, etc. and seeing what salaries their board pays for a role comparable to yours.
Many states, nonprofit associations and other organizations offer a database that contains this information by year to account for inflation. For example, in Indiana, we may reference Charitable Advisors’ 2021 Central Indiana Nonprofit Salary Survey Report, which contains a comprehensive summary of nonprofit salaries and benefits for 20+ positions based on data from over 280 nonprofit participants. Guidestar also has an extremely substantial report based on data from nonprofits all throughout the US.
This step is important because if the IRS were to do an audit of your organization and finds that your salary is excessive, you can be subject to personal liability and additional taxes. You will not know what a reasonable salary looks like until you complete this step, as different roles and different organizations (for example, a doctor at a nonprofit hospital vs. a pastor at a church) will come to different conclusions.
The board will come to a vote to make your hire official, including:
- Your annual salary
- Your medical benefits
- Your paid time off
- If applicable, a bonus structure
From here, you’ll experience the challenging, rewarding, fulfilling world of nonprofit leadership—with a paycheck to show for your blood, sweat and tears!
Other considerations when hiring nonprofit employees
When it’s time to begin hiring more staff for your organization, the board of directors will not always need to go through this same process every time a new hire is made. Typically, nonprofit boards will instead approve budgets for hiring in advance, in addition to different roles’ salaries and benefits.
There comes a point in a nonprofit board’s development where their purpose shifts from making daily decisions to high-level strategic planning. You can check our free resource on board stages for a point of reference, as it’s helpful at any juncture to evaluate how hands-on the board will be in the hiring process or in crafting the nonprofit’s employee handbook.
While on the topic of nonprofit professional development, here are some management tips from real nonprofit leaders who are subscribed to CEO and Managing Attorney Zac Kester’s monthly newsletter. For monthly exclusive nonprofit content sent straight to your inbox, subscribe here.