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Hello there, nonprofit leaders! In this comprehensive guide, I’ll walk you through the process of conducting your very own nonprofit market survey. This will be instrumental in helping you create fair and competitive compensation for your team. So, grab a cup of coffee, and let’s get started.

So, let’s jump into it.

Step 1: Define Your Job Classifications

Understanding the landscape of your organization is the first and foremost step. Every organization, including yours, has a variety of roles, each with its own set of responsibilities, level of authority, and required skill set. Your task is to classify these roles into categories or levels.

Here’s a comprehensive of potential factors in classifying a role.

Job Responsibilities: What are the tasks that the role is expected to perform? How complex are these tasks? What are the expected outcomes?
Skills and Qualifications: What level of education, skills, certifications, or licenses does the role require?
Experience: How much prior work experience is necessary for the role? What kind of experience is relevant?
Decision-Making Authority: To what extent does the role have autonomy to make decisions that impact the organization?
Level of Supervision: Does the role involve supervising other employees or volunteers? If so, how many and to what extent?
Impact on Organization: How directly does this role contribute to the organization’s overall mission and objectives?
Interactions and Communications: How much interaction does this role have with other staff, volunteers, clients, or external parties? What type of communication skills are required?
Working Conditions: What physical and mental demands are associated with the role? Does it involve travel, physical labor, high stress, etc.?
Confidentiality: Does the role involve access to sensitive or confidential information?
Complexity: How complex is the work that this role performs? Does it involve critical thinking, problem-solving, creativity, etc.?

Each of these factors play a role in determining the classification of a job within your organization. Keep in mind that the weight of each factor can vary depending on the unique requirements and structure of your organization.

Here’s an example to illustrate this: Let’s say you have a CEO, a Program Manager, a Development Coordinator, and a Clerk. Now, each of these positions represents a different level of responsibility and decision-making authority. Hence, they can be classified into different job levels – for instance, the CEO could be Level 1, Program Manager Level 2, Development Coordinator Level 3, and the Clerk Level 4.

Step 2: Identify Your Comparison Criteria

The next step is to understand where your organization stands in the larger scheme of things. No, it’s not about competition, but about understanding the ecosystem your organization is a part of.

Let’s use an example to make this clearer: Suppose your organization is a small non-profit working on affordable housing in New York City. Your comparison criteria would likely be other organizations of a similar size, operating in the same geographical area (NYC), and focusing on the same mission – affordable housing. So, you’ll compare your organization to others that fit this profile.

Here is a list of typical metrics used to determine comparable organizations in a salary market study:

Organization Size: This can be measured in terms of annual budget, number of employees, or number of clients served. Larger organizations typically have more resources and can afford to pay higher salaries than smaller organizations.
Geographic Location: Cost of living can vary significantly from one location to another, and this is often reflected in salary levels. Compare your organization to others in the same city, state, or region.
Industry or Sector: Salaries can differ significantly across industries or sectors. A nonprofit organization, for example, may not be able to offer the same salary levels as a for-profit company in the same field.
Mission or Program Area: Organizations with similar missions or program areas may have similar job roles and salary structures. For example, a health-focused nonprofit might compare itself to other health nonprofits.
Funding Sources: The nature of an organization’s funding can impact its ability to pay certain salaries. For instance, government-funded organizations may have different salary structures compared to organizations reliant on private donations or grants.
Organization Structure: The complexity and hierarchy of an organization can impact salaries. Organizations with many layers of management often have higher salary ranges.
Organization Age: Older, more established organizations might have higher pay scales compared to younger, startup organizations.

Each of these factors can help to identify a group of ‘peer organizations’ with which to compare your nonprofit’s salaries. Remember, the goal is to get a realistic sense of the market rate for each job role in your organization, and these metrics can provide a useful starting point.

Conducting Your Own Nonprofit Market Survey: A Step-By-Step Guide 1

Step 3: Locate Market Survey Sources

Alright, now that you have a clear picture of your job classifications and comparison criteria, it’s time to roll up your sleeves and dig for data. While there are several annual salary surveys available for purchase from reliable sources like Candid, there’s nothing like a hands-on approach.

Undertaking your own survey gives you first-hand information and an opportunity to network and collaborate with organizations similar to yours. Bear in mind, though, it’s a time-consuming process and requires persistence. Not all organizations you approach might be willing to share their information, but don’t get discouraged. Patience and persistence will eventually pay off.

Step 4: Identify Comparable Roles

The detective work starts when you have your data sources in place. For every role in your organization, you’ll want to find a matching role in your comparison organizations. Be careful not to lean too much on job titles; it’s the job description, responsibilities, and level of authority that count.

For example, consider your ‘Program Director.’ The equivalent role in another organization might be ‘Project Manager.’ This match isn’t based on the title but on the scope of work, required skills, decision-making authority, and level of supervision.

On the other hand, your ‘Outreach Coordinator’ might align more closely with a ‘Community Relations Specialist’ in another organization. Again, don’t be swayed by the title alone; look at the underlying responsibilities.

Here’s a table to illustrate this:

Job Title at Your Nonprofit	Job Title at Comparison Nonprofit	Key Responsibilities	Required Skills/Experience	Decision Making Authority	Level of Supervision
Program Director	Project Manager	Oversee program development and implementation; Coordinate with internal and external stakeholders; Manage program team	Leadership skills; Excellent communication; Prior experience in program management	High – Decides on the implementation of programs and strategies	Low – Works independently with minimal supervision
Outreach Coordinator	Community Relations Specialist	Coordinate and manage outreach initiatives; Build relationships with community and stakeholders; Oversee volunteers	Good interpersonal skills; Organizational skills; Experience in community outreach	Medium – Determines outreach initiatives, subject to approval from higher-ups	Moderate – Supervised by Program Director, but has autonomy over specific tasks

Table 1: Defining Comparable Roles

Remember, job classification is as much an art as a science. Be flexible, and use your knowledge of your organization’s roles and structure to guide you. This step will take some time, but it’s crucial for accurate results. So put on your detective hat, and get to work!

Step 5: Collect Compensation Data

With your comparable roles identified, it’s time to gather the salary data. This could come from the salary surveys you purchased or from the information shared by other organizations. Here’s an example of how you might organize your data:

Job Classification	Organization A	Organization B	Organization C	Organization D
CEO (Level 1)	$85,000	$90,000	$88,000	$92,000
Program Manager (Level 2)	$52,000	$56,000	$53,000	$58,000
Outreach Coordinator (Level 3)	$42,000	$45,000	$43,000	$46,000

Table 2: Documenting Market Survey Data

Step 6: Analyze the Data

So, you’ve got your data – great job! Now, it’s time to make sense of it all. For each job classification, determine the minimum, median, and maximum salary. This will provide the foundation for setting up a pay range for each role in your organization.

So, using our examples, here is a sample table for a few roles.

Job Title	Min Salary	Midpoint Salary	Max Salary
CEO (Level 1)	$85,000 (lowest observed min salary)	$88,750 (average of min and max)	$92,000 (highest observed max salary)
Program Manager (Level 2)	$52,000	$55,500	$58,000
Outreach Coordinator (Level 3)	$42,000	$44,500	$46,000

Table 3: Determining Pay Range from Market Survey Data

Step 7: Determine the Salary Range

Now, we’re reaching the finishing line of our survey marathon. You’ve got the average salaries for each job classification, and now it’s time to build a pay scale around them.

Let’s start with understanding a fundamental concept called the “Spread”. The spread refers to the range of pay, from the minimum to the maximum, that a specific job classification can offer. It is generally expressed as a percentage, and here’s how you calculate it:

Spread = (Maximum Pay – Minimum Pay) / Minimum Pay * 100%

The spread is critical because it provides room for an employee’s salary growth over time. However, just like Goldilocks and her porridge, you don’t want your spread to be too large or too small—it has to be just right.

If your spread is too small (less than 40%), you may have difficulty retaining employees, as there won’t be enough opportunities for their salary to grow within the job classification. This could lead to employees leaving for higher-paying opportunities elsewhere once they hit the top of the pay range.

On the other hand, if the spread is too large (greater than 60%), it may be challenging to maintain internal equity. There will be too much overlap between job classifications, which could lead to lower-ranking employees earning as much or more than those in higher-ranking positions.

As a general guideline, we recommend aiming for a spread between 40% – 60%. However, remember that setting pay scales is as much art as science, so use your discretion and knowledge about your specific organization to decide what will work best.

Job Classification	Minimum Pay	Midpoint Pay	Maximum Pay	Spread
CEO (Level 1)	$80,000	$85,000	$90,000	12.5%
Outreach Coordinator (Level 4)	$45,000	$52,500	$60,000	33.33%
Program Director (Level 2)	$65,000	$72,500	$80,000	23.07%
Development Associate (Level 3)	$50,000	$57,500	$65,000	30%
Operations Manager (Level 5)	$40,000	$47,500	$55,000	37.5%

Table 4: Determining Spreads

(Note: These are just example figures, and the spread has been calculated using the formula: Spread = (Maximum Pay – Minimum Pay) / Minimum Pay * 100%. The job titles, pay levels, and spread percentage would vary depending on the organization and its market survey results.)

Once you’ve determined your spread, you can now establish your pay ranges for each job classification. To do this, start by setting the minimum pay at the lower end of your spread and the maximum pay at the upper end. The midpoint can be calculated by adding the minimum and maximum and dividing by two.

Remember to revisit your pay scales periodically to ensure they remain competitive and reflect the realities of your labor market.

Conducting Your Own Nonprofit Market Survey: A Step-By-Step Guide 2

Congratulations! You’ve just completed your first market survey and established pay scales for your nonprofit. It’s a significant accomplishment that will go a long way in attracting and retaining top talent while maintaining internal equity. But remember, this is a dynamic process that should be reviewed and updated as your organization and the market changes.

TIP: Some organizations will choose to use “Market Target” rather than mid-point and may establish this as 75% – 90% of the market average for a role. Calling it a market target helps supervisors remember that this is the typical target for hiring a new employee into a role with standard levels of experience, knowledge, and other job qualifications.

Step 8: Review and Adjust as Needed

Step 8: Review and Adjust as Needed

The market is a dynamic entity that constantly evolves and adapts. Industries grow, technologies advance, and economic circumstances fluctuate – all of which can influence compensation standards across various sectors, including nonprofits.

Thus, setting pay scales is not a ‘set and forget’ kind of task. On the contrary, it requires periodic reviews and adjustments to ensure your organization’s pay scales remain competitive, fair, and relevant. You want to be able to attract and retain quality talent, and fair pay is a significant part of that equation.

Remember, the goal is not to compete against other nonprofits in terms of pay, but rather to offer a compensation package that reflects the market rate for the job and is aligned with your organization’s mission, vision, and resources.

Consider conducting a fresh market survey every two years. Why two years, you ask? Well, it strikes a balance between staying current and avoiding unnecessary disruption. Doing market surveys too often may lead to frequent changes in pay scales, causing confusion and potential dissatisfaction among staff. On the other hand, if you wait too long between surveys, your organization might fall behind, and your pay scales may no longer be competitive.

During the review, you might discover that certain job classifications require pay scale adjustments to reflect the current market rates. Or, you may find that new job classifications need to be introduced as your organization expands and roles evolve.

Keep in mind that reviewing and adjusting pay scales is as much an art as it is a science. Use the data collected from your market surveys as a starting point, but don’t forget to factor in your organization’s specific circumstances and needs.

For instance, you might need to adjust pay scales upwards for hard-to-fill roles to attract more candidates. Alternatively, if your organization is facing budget constraints, you might need to be more conservative with pay scale adjustments and find other ways to reward and motivate your employees, such as offering flexible working arrangements or additional professional development opportunities.

This ongoing process of reviewing and adjusting ensures your nonprofit remains an attractive place to work, not just in terms of mission fulfillment, but also in offering a fair and competitive compensation package. After all, the success of your nonprofit largely depends on the dedicated people who work there.

Incorporating Multiple Sources of Information

The process of conducting a market survey might sound a tad overwhelming, but I assure you, the results are worth the effort. One thing to remember is that the more diverse your sources of information are, the more comprehensive your data will be.

Think of it like cooking a soup. A national survey data might be your broth – it’s essential and gives you the general flavor. However, it’s the specifics – your own research and comparison with similar organizations, that add the spice and make the soup delicious.

National surveys usually offer comprehensive data for top-level roles but may lack specificity for lower-level or niche roles. That’s when your hand-picked organizational research comes into play, filling in the gaps, and providing a more holistic view.

Considering Other Factors

In addition to your market survey data, there may be other factors at play when determining your pay scales.

For example, do you find yourself repeatedly struggling to fill certain positions? That might indicate that the pay scale for these roles needs to be adjusted upwards. Often, organizations with predominantly salaried roles might need to elevate the pay scales of hourly positions to attract quality candidates.

Technology roles are another category that often needs special attention. Given the high demand and specialized skill set, tech roles often command higher pay scales than other positions in the organization. You might consider establishing a separate job classification scale for these roles.

Finally, notice that our example ranges have a spread of only $4,000 – $7,000. In the real world this seems too narrow of a salary range for a given job class.

FAQ

Q1: How often should I conduct a market survey?

It’s advisable to conduct a market survey every 1-2 years, but the frequency can vary depending on changes within your organization or market.

Q2: Should I only look at nonprofits for my market survey?

While nonprofits often make up a significant portion of your ‘market,’ it can be beneficial to include relevant for-profit organizations as well.

Q3: How do I handle roles that don’t have a clear comparable role in other organizations?

If you’re unable to find a direct match, look for roles with similar responsibilities and requirements. If this proves challenging, you may consider consulting an HR professional or compensation expert.

? Related Reading: Nonprofit Compensation Series

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? Related Reading: Nonprofit Compensation Series