How Much Should a Nonprofit Pay Its Chief Financial Officer?

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 30. October 2013 16:10

 

Of course, the answer is “it depends.”   In determining market compensation, ERI Economic Research Institute has found through its years of research that the influencing factors are what you do and where you do it.  “Where” refers to the kind and size of organization as well as its geographic location.  A quick review of the Form 990 data submitted annually by all US nonprofits shows the significant variation in compensation for nonprofit organizations providing human services, based on their size, as measured by annual revenue.

 

A closer look at the data reveals variety among different geographic areas as well as size.  Direct cash compensation for CFOs in human service organizations of various sizes is illustrated in the chart below:

 

 

An accurate assessment of market rates for the CFO position requires looking at comparable organizations providing similar services, but also of similar size and geographic location.  For a large organization, the labor market for the job may be national in scope, so the broader geographical choice may be more relevant.  For a small organization, the search for a CFO is likely to be state-wide or even city-wide.  ERI’s Nonprofit Comparables Assessor allows the user to choose the job title, revenue size, type of organization, and geographic scope to ensure that the most comparable data is used for the calculation.  With a click of the mouse, the user can access the actual Form 990 to find out more details. 

Unlike the Nonprofit Comparables Assessor, surveys can include data only from the organizations that respond, not all that file a Form 990.  Rarely are there detailed tables that provide data for just the revenue size, type of organization, and geography that are relevant.  As shown above, the differences in pay are significant, depending on the criteria used.