Fair Pay Considerations for Nonprofits and Donors

Salary and overtime rules due to change December 1 have been blocked in District Court
Proposed rule encourages serious dialogue about fair pay and work schedule for nonprofit employees

Recently, a nonprofit round table was held in the Flathead Valley to discuss the overtime rule that was scheduled to become law on December 1. This law was blocked last week with an injunction in the U.S. District Court in Texas.

While some nonprofit organizations may feel that they dodged a bullet, at least temporarily, the proposed law brings several issues to the forefront for discussion among nonprofit boards: salaries, funding operations, and sustainability.

In a nutshell, the rule which was to be implemented December 1, increased the salary level required for the executive, administrative, and professional (“white collar”) workers to be exempt from overtime. The new salary level was raised from $455 a week ($23,660 for a full-year worker) to $913 a week ($47,476 for a full-year worker). The effect on businesses, including nonprofits, would have been that any employee who earns less than $47,476 annually as a full time employee must be paid overtime at time and a half for any hours worked over 40 hours a week. The intent of the rule was to provide a better work-life balance for many workers, and to benefit employers by increasing productivity and reducing burnout and turnover.

What originally started out as a round table discussion about the overtime rule and how nonprofits were going to pay for the increased salary levels or increase their overtime budget quickly changed to something all too common among nonprofit leaders, how to deal with the mountain of work that often leads them to work after hours and eventually….how not to burn out.

Many nonprofits offer minimal salaries and offer little or no benefits. Most are privately funded and have to raise every dollar they get. In preparation for this new law, nonprofits and their boards have spent time reworking their budgets to meet the requirements of the law by increasing salaries or adding overtime budgets, not knowing where the additional funding would come from.

The irony of the round table discussion was that several planned to add another special fundraising event to pay for the increased cost. Yet the extra event would add even more overtime to the budget of the small staffed nonprofits.

Even though the law is currently blocked, a discussion by nonprofit boards regarding the pay level of their employees who are currently salaried at a level below $47,476 and work more than 40 hours a week would be timely. Strategic plans to build sustainability should be part of every nonprofits governance.

Our nonprofits do invaluable work in our community and most cannot run solely on volunteers, or by burning out their paid staff. If we want to keep our lakes free of invasive species, we need scientists to perform their testing and oversight. If we want someplace warm for the homeless to go for help and assistance we need our shelters staffed with people to oversee operations. If we want affordable housing to keep our community vibrant with young families, workers, and more, we need people to oversee building operations. All of these services and so many more are performed as programs of a nonprofit and, most require employees. No matter what you call it, operations, overhead, or core support, employees are the main component of providing the program service.

Many of us are now preparing to make end of year gifts to nonprofits. Wherever you give, your gift would do well to support the operations of the organization by designating it to the “greatest need”. And, when the Great Fish Community Challenge is launched again in 2017, we encourage you to support the Challenge by giving to the Great Fish Match (donations to the Match Fund can be made at anytime during the year) and/or the participating nonprofits. The Challenge is a no cost campaign designed encourage the community to give to help the nonprofits earn a matching incentive grant. Thank you for making a difference in our community!