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Article
provided by DRG, executive search consultants for the
nonprofit sector. drgnyc.com |
INTRODUCTION
This article, written and researched by DRG staff members,
represents a brief survey of the current literature in 2000
surrounding benefits trends for nonprofit executives. These
benefits have been cropping up more often in recent years.
Here is a guide to some of the most common.
MONETARY
BONUSES
Monetary bonus programs are increasingly becoming a component
of nonprofit executive's compensation packages. Studies are
showing that these bonuses are being awarded more frequently
to the top officers of civic associations and cultural organizations
than to those serving educational and human service foundations.
(1)
In
a study conducted by the National Society for Fundraising
Executives, 19.6% of the respondents received a bonus in 1998.
Approximately 4% of respondents received a bonus of 10% or
more of base salary and 12% received a bonus of 4% or more.
(2)
There
are several different types of bonuses that are becoming quite
common. Below are descriptions of some of the most prevalent.
Longevity
Bonus
These are awarded for several different reasons. One is to
reward employees for spending many years at a given institution.
In another example an organization might offer a bonus halfway
through a difficult campaign or project to those who stay
through until its completion. (3)
Performance/Merit
Bonus
These are increasingly common in the nonprofit sector. A survey
conducted by Ernst & Young of 193 nonprofit groups in
the NY metro area ("The 1998 Metro New York Not-for-Profit
Compensation & Benefits Survey") reported that 36%
of chief executives were eligible for a cash incentive as
a reward for good performance. The average bonus was $23,483,
or 17% of their base salary.(5)
Signing
Bonus
Signing bonuses are increasing in popularity, and are a means
by which to encourage a prospective employee to commit to
a new organization. They are usually in the range of 5 to
15% of the new base salary. (3) In a recent study 16.9% of
employers said they would pay a one-time bonus when recruiting
a new chief executive.
COMPANY
CARS
Educational institutions and human service organizations are
more likely to purchase or lease cars for their top executives
than are other nonprofits. This perk is also more common on
the West Coast than the East. (1) Others reimburse executives
for any business use of their private vehicles.
EMPLOYMENT
CONTRACTS
An employment contract is an agreement between an employer
and employee that may delineate such conditions as the number
of years of guaranteed employment, set pay increases, severance
pay, and/or a detailed description of the job's responsibilities.
In
the NonProfit Times' 2000 Salary Survey, 30% of responding
employers reported that their chief executives have employment
contracts. On top of that, 35.7% of employers who were not
currently using an employment contract said they would provide
one if a candidate for a top position so desired. (4) Many
employees reported that while they didn't have a formal employment
contract, they did have a written description of their position.
26.3% of responding employees reported having an employment
contract; 89.1% have a written position description.(2)
FLEXIBLE
WORK SCHEDULE
A flexible work schedule can be a competitive advantage in
attracting top talent if an organization has the ability to
offer it. In the age of telecommuting a nontraditional schedule
has become somewhat more common. However, the importance of
having all of the members of the staff together in the same
place at the same time varies from organization to organization,
and can sometimes make flexible hours very problematic.(4)
CLUB
MEMBERSHIPS
Golf/Country Only a very small percentage of nonprofit
organizations offer this deluxe perk. These few are mainly
educational or cultural institutions.(1)
Lunch
Club Membership to a "lunch club" is a much
more common benefit, particularly in cultural organizations,
educational institutions and foundations in the Mid-West.
Aside from their being a nice place to eat, many executives
put their lunch clubs to work for their organizations by using
them as a site for fundraising efforts. The clubs sometimes
donate memberships to nonprofits in exchange for being listed
as a donor.(1)
HOUSING
In a growing trend, organizations have been adding housing
support to their compensation packages. In most cases, the
company will assist the employee by means of loans for down
payments, points, broker fees, mortgage assistance, or apartment
rental and cost of living adjustments. This benefit is less
common in Middle America than it is on the East and West Coasts,
where housing costs are higher. A survey conducted by the
Chronicle for Philanthropy found that housing benefits were
more common in New York than in any other city. Educational
and some human service institutions can provide on-campus
housing.
The
scope and variety of the benefits being offered to executives
is ever expanding giving rise to a growing number of miscellaneous
perks that are routinely grouped together under the all-encompassing
heading of "fringe benefits."
Ninety-five
percent of nonprofit executives receive travel reimbursement,
84.4% have their professional organization dues paid for by
their organization, 84% get reimbursement for local mileage
on their car, 58.7% receive full or partial tuition reimbursement,
52.8% receive fully or partially paid for club memberships,
and 47.5% receive an automobile allowance. (2)
Of
the 246 surveyed by the chronicle of Philanthropy, 25 chief
executives were awarded fringe benefits valued at $100,000
or more.(9)
RETIREMENT
PLANS
The rules surrounding retirement plans for nonprofit executives
have changed in the last few years. Nonprofits have traditionally
only had the option of offering 403(b) retirement plans to
their employees. Starting January 1, 1997, however, all nongovernmental
nonprofit entities have been also allowed to offer the 401(k)
plans that have long been in use in the for-profit sector.
This plan may or may not be more attractive to the employer
and employee, depending upon the specific financial circumstances
of the organization and the individual.(11)
Only
11% of nonprofit employees have no employer-sponsored retirement
plan.(2)
SABBATICALS
Eight percent of nonprofit employers offer paid sabbaticals
that can range in length from one month to over a year after
a defined period of service. Additionally, according to the
Society for Human Resource Management, one quarter of nonprofits
offer the option of unpaid leaves.(12)
STRATEGIC
PAY RAISES
Occasionally an organization will decide that a spontaneous
pay raise is in order for an individual or a group of individuals.
These are usually given for strategic reasons, for example
to offset the reaction to raises at a competing organization,
or after an executive resigns, to attempt to prevent further
resignations.(3)
SUPPLEMENTAL
RETIREMENT AND/OR INSURANCE BENEFITS
These benefits have been decreasingly common in recent years.
Currently, roughly 30% of nonprofit executives receive supplementary
retirement or insurance benefits. Of those who still do receive
supplemental insurance or retirement funds, the dollar amount
varies widely from around 10% to nearly 300% of the base salary.
(1) Often these benefits address a difference in key insurances
between a current employer and previous employer's benefit.
Others may be part of compensation rewarding merit, longevity
or unique retirement concerns of a beloved executive.
TRAINING/CONTINUING
EDUCATION
Many organizations take on the financial responsibility for
helping their top employees achieve or maintain the up to
date training needed to stay on top of issues and skills essential
to their job. For example, in a 1999 profile of its membership,
the National Society for Fundraising Executives found that
72% of its members had all of their personal training costs
paid by their employer while another 11.6% had at least 50%
covered.(2)
TUITION
BENEFITS
Educational institutions are most likely to offer this benefit
with the most common example being the college or academy
faculty or administration member whose child is given free
or reduced tuition to the school.(1)
VOLUNTARY
BENEFITS
Voluntary benefits are another smart way for employers to
sweeten an executive's package without taking on too much
additional cost. Some examples are Transit Checks, STD &
LTD, Life Insurance, long-term Care, Accidental Death &
Dismemberment, Personal Auto, Homeowners, and Group Legal
Assistance. (13)
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Selected
Articles
-
Spencer,
Stuart, Issues in Not-for-Profit Management, summer 1998
-
NSFRE, 1999 Profile of NSFRE Members
-
Hall,
Holly, "Charities Offer New Incentives to Find and
Keep Fund Raisers," The Chronicle of Philanthropy,
April 22, 1999
-
Clolery, Paul, The NonProfit Times-NPT Salary Survey, February
1, 2000
-
Marchetti,
Domenica, "Pay at New York Non-Profit Groups Beats
Inflation," The Chronicle of Philanthropy, September
23, 1999
-
Labaton,
Stephen, "New Rules Lift the Lid on Non-Profit Pay,"
Giving-A Special Report, The New York Times, November 17,
1999
-
National
Journal, "The Benefits Game," January 14, 2000
-
Pope,
Tom, "Tax-Deferred Pay: Some stock plans are risky,"
NonProfit Times, April 2000
-
Chronicle of Philanthropy, "Top Leade´s See Fatter
Paychecks," September 23, 1999
-
o
Barber, Putnam, Nonprofit Online News Bulletin, February,
3, 1999
-
Chambers, Robert Gordon, Don Kramer´s NonProfit Issues,
Supplement Ready Reference #4, "Compare Benefits of
401(k) and 403(b) plans.
-
Sommerfeld,
Meg, "A Break Between Good Deeds," The Chronicle
of Philanthropy, March 23, 2000 Robinson, Judith L., CPCU,
"Stretching the Benefit Dollar," Association Executive,
No-Dec 1999
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