What percentage of your nonprofit budget should salaries and administrative expenses be?

Volunteers of all ages and backgrounds serve nonprofits in various roles and for varying lengths of time. Some, especially retirees, show up year after year, while others may volunteer for a special event or help out with a special project for one day or a weekend. A budget for non-profit organizations should function as a living document, not a set-and-forget plan. Grant tracking helps monitor restricted funding compliance, while cash flow projections ensure adequate liquidity. Regular comparison of budget versus actual figures highlights areas needing attention before they become problems. Your budget template should serve as both a planning tool and a monitoring system.

Does the president of a nonprofit get paid?

Likewise, factor in training and professional development to maintain team effectiveness. Include costs for board support, strategic planning, and quality assurance. Unlike traditional banks and other nonprofit lenders, we don’t ask for collateral or a personal guarantee.

Net Margin Ratio

• For example, if an organization is trying to right past wrongs regarding equitable pay, it may bump the salary up if it has hired a woman or BIPOC leader.
• While many funders and donors focus on program expenses, sustainable nonprofit organizations need appropriate investment in core operations.
• Following frustrating pandemic-related delays, the IRS released around a million Form 990 files in May 2023, providing crucial data to offer a more complete picture of nonprofit compensation.
• The most obvious factors are the salary of the previous executive director, the salary of the next highest-paid employee, and internal compensation policies.
• It might feel daunting—but nonprofit payroll isn’t as complicated as you may think.

When we look at an organization’s personnel expense ratio, comparing and interpreting this number can be much more nuanced, because this ratio really could look very different even from one healthy nonprofit to another. An operating, or operational, budget outlines the funds you need to make your business run efficiently and successfully during a period. It consists of all revenues and expenses your company expects to use for its operations.

How Much Do Nonprofits Pay Employees

Learn more about Candid’s 2023 Nonprofit Compensation Report by visiting this webpage and downloading a sample report. Fundraising accounts a major percentage of the revenue of a non-profit organization. A vice-president engages businesses and citizens to support the cause or mission of the organization. Creating fundraising ideas, implementing fundraising events and personal involvement with the fundraising activities are important duties of the vice-president. Typically, the non-profit board includes a president, vice president, treasurer, and secretary. All board members, regardless of position, are volunteers and separate from paid staff of the organization.

How much should a nonprofit spend on overhead?

Many organizations include salary costs in grant proposals and build appropriate overhead into their program budgets. Successful nonprofits prioritize competitive The Key Benefits of Accounting Services for Nonprofit Organizations compensation to attract and retain talented staff while maintaining transparent communication with donors about staffing costs. Unlike for-profit businesses, most nonprofit organizations operate on shoestring budgets, which makes the question of how a founder of a nonprofit gets paid a highly contentious one. Yet, owners of nonprofits can also get paid for running the organizations.

OneDigital Welcomes Nonprofit HR, Expanding Capabilities for the Social Impact Sector

Some watchdogs view spending on overhead as a percent of operations costs. For example, some watchdogs believe nonprofits should spend no more than 35% of their donations on overhead. The Better Business Bureau suggests that nonprofits should spend less than 10% on executive compensation. Charity Navigator suggests that under 35% of funds should be spent on fundraising to raise each dollar.

How much is too much when it comes to nonprofit executive compensation?

• For instance, the Better Business Bureau standards for charities say that at least 65% of a nonprofit budget (including salaries) should be devoted to programming expenses.
• For example, if you’re looking to scale your programs, you need to scale your fundraising efforts.
• Several key features distinguish effective nonprofit budgets from basic financial plans.
• Donors and grantmakers want to know that their money is going to an organization that is financially healthy and stable.
• With most payroll software, it will take 2 days between running payroll and the paychecks going out.

Depending on the size of the church, the median ranges between 47 and 52 percent (trending higher as budget increases). The reason nonprofit employees are paid less, according to researchers Christopher Ruhm and Carey Borkoski, is simply because nonprofit organizations are disproportionately concentrated in low-paying industries. The gender pay gap has been slowly declining overall with female CEOs gaining 6 cents to the dollar since 2011. Still, the median compensation of female CEOs was lower than that of male CEOs at nonprofit organizations of all sizes—with females making 73 cents for every dollar a male makes.

• Cost of labor is how expensive it is to hire people in an area—not how expensive it is to live in that area.
• Rita worked for many years in financial services and institutional money management.
• Charity Watch has one of the most sophisticated and complex scoring systems to rate nonprofit financial health.
• Every nonprofit should use compliant employment and compensation practices that are in consonance with IRS standards when allocating funds for the payment of salaries.
• Overall wages have not kept up with the rising cost of goods and services.

Executive Director Compensation Beyond Salary

If you want a headstart, you can jump straight to my free Executive Director Salary Calculator. Grants offered by government agencies represent a large percentage of nonprofit financing. Fundraising is critical for a https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ nonprofit to succeed, so finding ways to make this work more efficiently and productively helps every organization — and board.

How does a CEO of a nonprofit get paid?

In these situations, the board has decided they want one executive to carry out the day-to-day work of the organization but don’t have the funds to compensate adequately. Usually, this is mutually agreed to between the board and the executive director. However, in my experience, the vast majority of unpaid executive directors would prefer some form of compensation but the organization may not have the funds. One of my clients in the Midwest consistently puts her organization ahead of her own interests in terms of pay.