Worker pay chief concern in BKD nonprofit study

Dan Prater: Idea that nonprofit employees shouldn’t make fair pay is antiquated.

Springfield-based BKD LLP's 2022 State of the Nonprofit Sector report found workforce challenges are a large concern for leaders of surveyed organizations.

Dan Prater, senior managing consultant with BKD and author of the study released this morning, said nonprofit employee issues aren't new to the COVID-19 pandemic.

"Historically, nonprofits have suffered from turnover because many of them do not pay as well as the for-profit world," he said.

The second annual study, conducted in late 2021 by surveying 878 nonprofits nationwide, found 71% were hampered by staffing shortages. In an effort to improve recruitment and retention, 78.4% of nonprofit leaders said they were increasing pay and benefits. Additionally, 71.2% responded that they were working to improve workplace diversity and inclusion efforts, 66.8% are increasing workplace flexibility and 63.6% are shoring up internal advancement opportunities.

Prater said an outdated mythos about nonprofits is partly to blame. Donors historically have expected their funds to go directly to programs, rather than employee pay, he said.

"For some reason when it comes to nonprofits, people are outraged when we pay people fairly. I'm trying my best to change this," Prater said. "The true measure of success in the nonprofit industry is not our ratio of program to overhead expenses, it's whether we have a clearly stated mission and we're accomplishing that mission."

One way in which nonprofits can overcome old beliefs is to communicate efficiently and often with donors, he said.

"The reason most donors quit is because of communication issues," Prater said.

During the pandemic, Prater said nonprofits fared well compared with other types of organizations.

"There was this rise in generosity. A lot of people understood how important nonprofits were," he said. "Oddly enough, giving was strong and lot of organizations over the past 12-18 months have done OK."

But nonprofit leaders now are worried donations may cool off as the pandemic fades, Prater said.

The reason, he said, is that people have become numb to COVID-19, and federal stimulus funds have stopped flowing as freely.

For nonprofits, Prater said it goes back to communicating effectively but it could mean an operational shift, as well.

"I think organizations would be better to stop talking about donations," he said. "We need to talk about partnerships. We need to talk about investments."

In the survey, 21.6% of respondents were from the Midwest. In the Springfield area, the nonprofit industry is strong, Prater said, with 2,877 registered tax-exempt organizations representing $6.2 billion in assets in Greene County alone.

As shown in the Springfield area, the nonprofit world requires an all-hands-on-deck approach.

"I think Springfield really does this well," Prater said. "It's not just the nonprofit's issue. It's everybody's issue.

"To really make it work, we need corporate America, we need for-profit entities. We need everybody doing their part."