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REUTERS/Mohamed Abd El Ghany
It’s not just about the money.
PAY WITH PURPOSE

The surprising salary comparisons for jobs in the for-profit vs nonprofit sectors

By Michelle Cheng

Another class of college graduates is about to enter the workforce—and they’re not just looking for any job.

With more freedom to consider more options in a tight labor market, new grads are less interested in traditionally high-paying fields compared with grads from four years ago, and are turning toward art and social-service jobs, according to the jobs site Indeed. Meanwhile, in a new Gallup poll, four out of five recent college grads said it is very important to have a sense of purpose in their work.

With college debt soaring in the trillions, can new grads find work that offers both money and meaning?

For the latter, they may be tempted to consider the nonprofit sector. But it turns out working at a nonprofit may provide more than just the ability to work for a cause. Average compensation—including wages, health insurance, retirement, and savings benefits—for workers at nonprofits is $7.86 per hour higher than what for-profit workers earn, according to US Bureau of Labor Statistics data from 2014, the latest year for which the figures are available.

 

Across various occupations, median nonprofit salaries range from around $32,000 to $70,000, according to data from salary comparison site PayScale. The average is around $50,000.

For jobs in finance, human resources, marketing, advocacy, and education, you’re probably still better off, salary-wise, sticking to the for-profit sector. But nonprofit jobs in the health/medical, childcare, and retail industries often pay more than their for-profit counterparts, according to data from PayScale, a salary comparison site. The average salaries in the table below come from more than 200,000 Californians who took PayScale’s online salary survey between April 2015 and April 2019.

Non-profit job categoriesNon-profit salariesFor-profit salaries
Accounting & finance$65,700$73,900
Administrative & clerical$42,100$43,500
Advocacy$39,200$43,300
Childcare$35,500$30,900
Event planning$51,400$54,200
Health/medical$71,400$68,100
Human resources$61,400$70,100
Marketing & advertising$57,200$86,200
Retail$32,200$30,000
Social service$44,700$53,000
Volunteer services$42,900
Development & fundraising$66,500$78,800
Education & teaching$37,700$42,200

But why the pay gap between nonprofit vs. for-profit? There are several possible reasons. With few incentives to maximize profits, nonprofits may be transferring more of their returns to workers, in the form of higher compensation. Differences in occupations also account for the gap, as managers and professionals make up a much larger share of workers at nonprofits like universities and hospitals than at typical for-profit enterprises.

The type of labor is also different—private firms employ a larger share of workers in entry-level positions such as food preparation or janitorial work. And workers who go into nonprofits often have a college degree.

Still, nonprofit employment isn’t always as rosy as it sounds. When working for a specific goal or purpose in mind, the stakes may be higher and concrete results of success can be difficult to identify. In addition, the level of burnout can be high, particularly when employees are expected to do more work with fewer resources. An independent review of workplace conditions at Amnesty International recently found that employees of the human-rights organization were mainly stressed not from interviewing survivors of torture or from watching “distressing” footage as part of their monitoring of conditions around the world—but from being managed in a workplace that many staffers described as “toxic.”

Though the money might not be the primary draw, employment in the US nonprofit sector—the largest employer after retail and manufacturing, according to the Johns Hopkins Center for Civil Society Studies—is booming. In California, for example, nonprofit employment grew more than 18% from 2007 to 2016, versus 7.3% growth in for-profit sector, according to a new report from Work for Good, a nonprofit jobs board focused on nonprofit careers. 

The growing interest in nonprofit work is yet another signal that employers should be aligning themselves with their purpose-driven employee pools. Plus, it pays off: Studies show that employees who derive meaning from work report higher satisfaction and are more likely to stay with the company longer. In short, companies should no longer be striving to either be purpose-driven or profit-driven—but finding a case for both.