Recent national media reports of executive-level salaries in the charitable sector have painted an incomplete picture of managerial compensation. They would have Canadians believe that those who work in the nonprofit sector are prone to receiving disproportionately large salaries, largely thanks to a pervasive disregard for the interests of well-intentioned donors and for a lack of commitment to the communities they serve.

A cynically titled Canadian Press (CP) story, “Goodwill means good wages for Canadian charity employees,” made the rounds last week, focusing on how various senior level managers and support staff for some of the country’s largest, most high profile nonprofits earn salaries in excess of six figures.

The story informs Canadian donors and stakeholders of said charities, foundations and various nonprofits that some 6,000 people who work in the sector earn more than $120,000 a year in salary, with a handful earning more than $350,000. The implication being that donations are going towards funding exorbitant salaries in the sector instead of helping nonprofits achieve their missions. But this compensation snapshot lacks a deeper understanding of what compensation actually looks like in the sector as a whole.

CharityVillage®’s soon-to-be-released 2011 Canadian Charitable and Nonprofit Sector Compensation and Benefits Study, based on a self-selected group of 1,100 organizations, will provide a different look at how these salaries are distributed and a larger snapshot of where sector salaries are at across the board.

Keep in mind: the above-mentioned high-earners are 6,000 employees out of a total sector workforce of more than two million. They represent 0.3 percent of the sector’s total workforce. They reflect compensation for individuals who help run multi-million dollar organizations, serving hundreds of thousands of Canadians, and whose counterparts in the for-profit sector are compensated at significantly higher levels. In addition, the sub-text to the story, is that these multi-million dollar organizations, unlike their for-profit counter-parts, can either run themselves, or could be run by under-paid people if those individuals were given the chance to do so.

A mixed bag of results

As a counter-point, the CharityVillage® study takes CP’s sensationalized $120,000 salary figure and puts it into a more logical context.

The study, conducted in March this year, provides a number of key findings, including revelations that nonprofit compensation rates aren’t expected to rise much in the next year (between 1.5 and 2.5 percent); that there is still a gender gap in salaries in the sector; and that most nonprofits offer employee benefits beyond cash compensation, as well as modest perks when compared to other sector perquisites.

Executive level salaries in the sector, on average, fall well below the six-figure mark, according to the upcoming CharityVillage® report. In fact, the study found that as of March 2011, average annual compensation for chief executives amounts to approximately $88,000. And that’s on the higher end of the scale. Meanwhile, the average salary for charitable sector frontline support staff falls just under $37,000.

Additionally, less than seven percent of nonprofits offer incentive plans to employees. This includes senior management.

Educating stakeholders

While it’s easy to point the finger at overzealous media reports for fanning the flames of distrust among Canadians about how their donor dollars are apportioned, some responsibility for this rests with the nonprofit sector itself.

For years now, the corporate world has moved down a path to greater accountability and transparency in its methodologies towards compensation and related disclosure. The vast majority of Canada’s 161,000 nonprofits and charities have not, overall, shown a willingness to conduct the same intense outreach to their clients and donors in order to educate them about precisely where, why and how their donations are spent.

This perceived lack of transparency in the sector is what has left the door open for reports like the one in the Canadian Press to flourish and take hold in the minds of Canadians.

As a result, organizations like Imagine Canada are now striving mightily to get the country’s nonprofits on board with projects like the 2011 Standards Program, which seeks to undo some of the damage done both by negative media portrayals of the sector and by the sector’s own hubris.

Imagine’s stated goals for its program are fourfold: to help charities and nonprofits improve their practices by providing educational tools and capacity-building initiatives; foster public trust, promote confidence in the sector and protect both the credibility of the sector and the interests of the public; create a community of practice in the charitable and nonprofit sector; and unite the charitable and nonprofit sector through shared standards that demonstrate good governance of the community organizations that the public entrusts them to lead.

In addition, readers should watch for the pending release of CharityVillage®’s 2011 Canadian Charitable and Nonprofit Sector Compensation and Benefits Study, which will provide all Canadians much-needed insight into how those employed in charities and nonprofits are compensated. It will also give readers (including journalists) much food for thought about how most Canadian charitable sector employees tough out these economic times on salaries that are improving, but are still off-pace with their for-profit peers.

Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.

Please note: While we ensure that all links and email addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other websites and email addresses may no longer be accurate.