Underpaid and overworked has become the norm for nonprofit workers today. A movementto increase wages for front line employees in this sector is picking up steam, but faces an uphill battle. It is often assumed that these workers experience so much personal fulfillment due the nature of their work that they willingly accept lower compensation. Manystudieshave shown that workers are willing to make this trade, but just how much is that fulfillment worth?Using data collected through the PayScale salary survey, we examined the value of nonprofit work and a meaningful mission across a range of jobs. We discovered that while it certainly is true that nonprofit work comes with a pay cut, the most meaningful jobs don’t necessarily have the lowest pay.

Can Meaningful Work Make Up for Lower Pay?

To compare nonprofit and for-profit workers, we focused on directly comparable job titles. We looked at eight distinct positions commonly found in both the for-profit and nonprofit sectors.

• Administrative assistant
• Graphic designer
• Human Resources (HR) manager
• Human Resources (HR) generalist
• Marketing manager
• Marketing coordinator
• Staff accountant
• Systems administrator

We also asked these workers whether they thought their job made the world a better place. They could respond in one of five ways: 1) Very much so, 2) yes, 3) a little, 4) no, or 5) my job makes the world a worse place. To understand if they felt their jobs were meaningful, we calculated how likely a nonprofit worker was to respond “Yes” or “Very much so” to this question relative to for-profit workers with the same job (see Methodology for more details). We call this the “High Meaning” ratio.A ratio of 1 indicates that nonprofit workers in that job find their work to be equally meaningful as their counterparts in the for-profit sector. A High Meaning ratio above 1 means that nonprofit workers in a particular job find the job to be more meaningful than their for-profit counterparts. For example, a ratio of 2.0 means that the nonprofit worker is two times as likely to say that their job made the world a better place as a for-profit worker.

Nonprofit Jobs Pay Less but Mean More

Our analysis indicated that the “nonprofit discount” is dependent on job title, but it is significant. For seven of the eight titles we examined, nonprofit workers earned between 4 percent and 8 percent less than their counterparts at for-profit companies. Marketing managers were the outlier: those at nonprofits earn nearly 18 percent less.

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nonprofit jobs whose pay meet or exceed the market rate. That said, we observed a consistent pay disparity in this analysis. As such, we can confidently say that some workers want to make the world a better place, even if it costs them.Does this mean that nonprofit organizations should try to pay everyone 5 percent less? No. Wages determined by market rates and will depend not only on job title, but a host of other factors including location, required educations and skills. But cash strapped nonprofits don’t need to worry about giving up their employee discount, and nonprofit workers can rest easy knowing that making world a better place doesn’t have to mean an empty wallet.

Editor's note: Tim Wolock provided statistical analysis and made other contributions to this piece.

Methodology

Between August 2014 and August 2018, over 140,000 people took PayScale’s salary survey. We compared the pay of nonprofit workers, excluding those working for hospitals or universities, with that of for-profit workers. To find the list of jobs included in this analysis, we took the geometric mean of the two values (nonprofit and for-profit workers) for each job.We then manually selected our list of jobs from the jobs with the 50 highest geometric means.To estimate the effect of working for a nonprofit, for each of the eight job titles we ran an OLS regression of the natural log of pay on:

• Organization type (nonprofit or not)
• Years of experience
• Years of experience squared
• Management status
• Education level (no bachelor’s degree, bachelor’s degree, or graduate degree),
• Metropolitan area
  • Some metropolitan areas had very few observations, so we binned any area with fewer than seven responses into a state-specific “Rural” area. For example, Yuma, AZ was moved into the “Rural AZ” area.
• Broad industry (NAICS 50).

We exponentiated and subtracted 1.0 from the regression coefficients to convert them to percent changes.In each regression, the coefficient on working for a nonprofit was significant at an alpha level of 0.001.In addition to asking about pay and compensable factors, we also asked survey respondents “Does your work make the world a better place?” The answer options were:

• Very much so
• Yes
• A little
• No
• My job may make the world a worse place.

For more information on PayScale’s data and methodology, please see: PayScale's Methodology Explained.

Definitions

For-profit worker

- A “for-profit” worker is anyone who selected “company” as their employer type.

Nonprofit worker

- A “nonprofit” worker is anyone who indicated that their employer was a “nonprofit organization.” Those who selected “Hospital” or “University” are not included in this analysis.

Pay

- Our measure of pay is Total Cash Compensation (TCC). TCC combines base annual salary or hourly wage, bonuses, profit sharing, tips, commissions, and other forms of cash earnings, as applicable. It does not include equity (stock) compensation, cash value of retirement benefits, or value of other non-cash benefits (e.g., healthcare).