January 22, 2020
Study Shows Mass. Nonprofit Gender Pay Gap Reflects U.S.

September 25, 2014 — A newly published nonprofit compensation study shows that, nationally, compensation for female CEOs lags that of their male counterparts – just as in Massachusetts.

The 2014 GuideStar Nonprofit Compensation Report, released this week and said to be the most comprehensive nonprofit compensation study available, found that for the fourteenth consecutive year, median compensation for female CEOs lagged behind that of male CEOs by up to 23% depending on organization size.

The report also found that only 17% of organizations with budgets larger than $50 million had a female CEO, compared to smaller organizations with less than a million dollar budget, the majority of which have women CEOs.

A report released this summer by Third Sector New England (TSNE), a Boston-based nonprofit that provides management resources to other nonprofits, found that in Massachusetts female nonprofit leaders, on average, are paid 24% less than their male counterparts – $106,627 vs. $139,506 per year.

In Massachusetts, the greatest gender disparity in average salary for executive directors or CEOs is for those in the 75th percentile, according to the TSNE study. In that group, women are paid an average of 28% less than men – $134,992 vs. $187,821 annually. The 75th percentile is the data point below which 75% of the sample falls.

Commenting on the gender gap, Chuck McLean, vice president of research for GuideStar, said, “All of this tells us that the social sector has a long way to go to meet gender equity in executive compensation."

The TSNE executive pay findings were based on a survey of 227 Massachusetts nonprofits in 2013, while the Guidestar report was derived from data reported to the IRS by more than 91,000 organizations from the entire 501(c) universe for fiscal year 2012.

Other findings from the GuideStar report include the following:
  • Since 2002, the percentage of female CEOs has increased for organizations of most sizes, but the changes are fairly modest. The majority of organizations with budgets of $1 million or less have women as CEOs. Female representation in that role declines as budget size increases. Only 17% of organizations with budgets of more than $50 million had female CEOs in 2012.

  • The health and science organizations had the highest overall median salaries. Arts, religion, and animal-related organizations brought up the rear.

  • For the ninth consecutive year, Washington, D.C., had the highest overall median salary of the top 20 metropolitan statistical areas (MSAs). For the second consecutive year, Portland, Oregon, had the lowest median salary.
Nonprofits are tasked with setting executive compensation at a reasonable level under the IRS's enforcement of the federal private inurement prohibition. Organizations need to be aware of the regulations governing executive compensation, and the process used to determine executive pay must be thoroughly documented.

"In determining an executive's compensation, the board or committee of the board must document the full process – what are the details of the compensation package, when was it approved, who approved it, what comparability data was used," said McLean. "The board must use data from comparable organizations in determining appropriate compensation."

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