Women Leaders Still Make Less Than Their Male Counterparts…Even in the Nonprofit Sector

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GuideStar recently released its 2015 Nonprofit Compensation Report, an annual report compiled using data reported by exempt organizations to the IRS for 2013.  Unfortunately, the Report’s findings regarding women leaders in the sector are not at all encouraging.  According to a list compiled by the author of the Report, the Report resulted in the following Key Findings, among others:

  • The percentage of female chief executive officers at nonprofits overall has decreased over the last decade. Although the percentage of female CEOs at larger nonprofits with annual budgets over $10 million increased slightly, the percentage of female CEOs at nonprofits with annual budgets under $5 million actually decreased.
  • Of the nonprofits with annual budgets over $50 million, a mere 18 percent of them had a female CEO. The percentage of women CEOs in nonprofits in this size category has only increased 4 percent in the last ten years.
  • For nonprofits that do have female CEOs, their male counterparts at other organizations earned between 6 and 23 percent more than they did in 2013. This is an improvement from the 21 to 47 percent discrepancy, depending on organization size, that GuideStar found when it first began reporting on the gender pay gap in nonprofits in 2001, but it still far from parity.

The Chronicle of Philanthropy reported that the compensation gap was most dramatic for women CEOs at nonprofits with annual budgets ranging from $2.5 million to $5 million, whose male counterparts earned a shocking 23 percent more than them.  Even at small nonprofits with annual budgets of less than $250,000, male CEOs still out-earned female CEOs by 6 percent, the lowest discrepancy found in any of the categories of budget size.  Over the last decade, the gender pay gap has slightly narrowed for organizations with budgets of $1 million or less or $50 million or more, but has actually widened for organizations with budgets between $1 million and $50 million.

The disparate treatment of female nonprofit CEOs with respect to compensation was further on display at the recent testimony of Cecile Richards, President of Planned Parenthood, before the House government oversight committee.  In his opening statement, committee Chairman Jason Chaffetz stated that Planned Parenthood wasn’t in need of federal subsidies, as evidenced by Richards’s compensation.  During questioning, he later continued to press her on the specific amounts of her compensation in various years in a condescending and derogatory manner.  Representative Carolyn Maloney responded to his questioning by commenting “In my entire time I’ve been in Congress, I’ve never seen a witness beaten up and questioned about their salary” and accused Mr. Chaffetz of “beating up on a woman, our witness, for making a good salary.”  As Nonprofit Quarterly pointed out, Richards’s compensation is actually low compared to the average CEO compensation for organizations with annual budgets of more than $50 million as reported by the GuideStar Report.

Although organizations recognized as exempt under Section 501(c)(3) must ensure that compensation they pay to executives is fair, reasonable, and not excessive, I think that the dismaying results of the Report raise some questions that all nonprofit Boards of Directors should be asking themselves.  Is their CEO’s compensation in fact fair and reasonable in light of the services the organization is receiving in return?  How does that compensation compare to that paid by similarly sized and similarly situated organizations?  Has the organization offered compensation that will enable it to attract the level of talent that it desires and needs?  Within the boundaries applicable to 501(c)(3) organizations with respect to compensation, does the organization’s compensation generally reflect the values that the nonprofit strives to stand for?  Has the organization inadvertently allowed any form of bias (by a Director, major donor, or other stakeholder) to influence its decisions regarding compensation?

While nonprofit Directors must be cognizant of the federal and, in some cases, state regulations regarding nonprofit compensation, asking these questions, and considering how the answers may reflect on the organization, may also very well be a part of carrying out a Director’s fiduciary duties owed to the nonprofit on whose Board she sits.  I hope that the results of future nonprofit sector compensation reports will tell a very different story!

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