Equitable Pay is Economic Justice
- Essential Common Future
Why we completed a compensation audit, how we did it, and why you should too.
One of the clearest ways an organization demonstrates how it values its employees is through compensation. Unfortunately, according to the Bureau of Labor Statistics, workers in the nonprofit industry make an average $3.36 less per hour than their counterparts in the for-profit sector. This pay gap only widens for BIPOC women—who are further disenfranchised by a gender and racial pay gap, and significantly more likely to take out loans due to a lack of general wealth.
At Common Future I am seen as a leader through my work as Chief Operating Officer, but I am also a Black woman, and a first-generation college graduate from East Oakland, California. I have student loan debt from undergrad and law school. I am a caregiver as a parent, and I have financially supported members of my extended family, including those deemed essential workers during the pandemic. Until just recently, I moved almost every year to ensure I could afford rising rents. I have lived with the fear of living paycheck to paycheck, knowing that even one unexpected medical bill could lead to a downward financial spiral that no budgeting strategy could save me from. At the same time, I recognize that I now have privileges that were previously only a dream. And as a result, I feel passionately that it is incumbent upon leaders to ensure we create the conditions that foster equity—especially in compensation—and that chip away at the status quo of injustice.
The idea that individuals who choose to work in the nonprofit sector shouldn’t mind being paid less compared to other sectors—and the practices that guarantee as much—is rooted in harmful echoes of capitalism. We see this in this in so many aspects endemic to our sector:
• Pressure from funders to keep overhead—inclusive of salaries—low.
• Failure of funders to provide unrestricted general operating dollars.
• Funders’ lack of understanding of the full costs to do the organization’s work, including attracting and retaining top talent.
• Philanthropy’s roots in charity and volunteerism, where the work is seen as a hobby.
• The sector’s internalization and perpetuation of racial and gender pay gaps and extractive labor practices.
With that in mind, I felt compelled to write about Common Future’s recently completed compensation audit. To begin grappling with these beliefs and practices that are harmful to a staff like ours—Black led, multi-racial, and majority women—we prioritized conducting the audit and philosophy. By sharing our experience, it is our hope that others in the sector might consider exploring the same and that funders recognize the role they can have in ensuring equitable compensation.
Similarly to other ways in which we are looking inward to examine traditional work practices, we proactively sought to do a compensation audit to intentionally advance an equitable approach to compensation. As an organization that is focused on racial and economic justice, we knew it was incumbent upon us to not only think about our external work, but also how we live out the values of justice internally as well.
We posed the question, “How can we ensure we are supporting our majority BIPOC staff in wealth building?” or at the very least, “How can we ensure that our practices do not require staff to have to accumulate more debt to survive and thrive?” I have never heard the term wealth building in the same sentence as nonprofit compensation, but we are called to imagine the possibilities without limitation to foster the change we seek. As a growing organization, the time was ripe for us to consider ensuring pay equity as we were bringing on new staff.
Running the Compensation Audit
To conduct the audit, we partnered with consulting firm Edgility for additional capacity and expertise in understanding opportunity gaps through surveys, staff interviews and focus groups, benchmarking roles, and answering key questions about organizational practices around how we pay people. With them, we developed a structure and philosophy that allows us to consistently promote equity and that realistically enabled us to incorporate our organizational budget.
For this audit, we got a head start by updating all job descriptions as a part of our four-day work week pilot. We knew that we wanted job descriptions to be aligned with the actual work that our employees do, instead of requiring them to wear many hats without appropriate recognition and pay, another harmful but common practice in the sector. With these descriptions updated accurately, we were able to review an extensive job bank that lists thousands of roles with titles and job descriptions, giving us the flexibility to ensure alignment between how the market understands a role and how we understand it. After grouping similar roles and understanding the benchmarking, we talked through key considerations—including decision points on employee recognition, merit pay, bonuses, benefits and rewards, geographic factors, salary caps, professional development, and performance management—that reflect the approach we used to increase salaries across the organization, and that we continue using to fairly determine pay for promotions and new hires.
Weighing What to Reward
A key insight for us was realizing that we didn’t want to give more weight to years of experience compared to other factors that determine pay. While years of experience is deemed one of the most objective indicators, we know that more heavily assessing this would lead us to enshrine the status quo where years of experience truly only represents access to opportunity. We know from our lived experiences that access to opportunity is not always based on merit, as BIPOC individuals have been excluded from opportunities for which we are qualified. Thus, we decided to use a hybrid of rewarding years of experience and competency to do the work. In tandem with the audit, we developed a performance framework and a series of supervisor-focused trainings that allow us to fairly assess competency. This is another area where inequity comes into play, as some individuals are presumed competent and given the benefit of the doubt based on unproven potential and others are required to offer specific proof. These biases can coincide with race, gender, where you went to school, and other variables that are not related to the actual job but that can heavily impact pay.
Budget and Impact
After assessing the factors above, we worked with our consultants to understand the impact to our budget. It was critical that we did not lead with our budget so as not to diminish our understanding of where compensation should be.
We were able to raise pay across the board, landing on the 40th percentile of the market, with plans to increase to the 50th percentile over the next 1-2 years. We learned that the 50th percentile is considered the market median. Factoring in our budget, we knew we couldn’t make an immediate jump to this level across the board, but we were able to commit to getting there over time. Further, understanding percentiles enabled us to revisit other key benefits to ensure they were also competitive and perhaps even more robust, knowing some of the limitations our budget poses on compensation. Because we were undergoing this process in advance of our organizational budgeting process, we were able to have this discussion with our Board of Directors and build flexibility into the budget with the assumption that we’d need to increase pay.
This process took us almost a year to fully implement, considering the core leadership discussions required and the work to thoughtfully develop a structure that would extend beyond just this year. We were and are a growing organization and rather than continue to haphazardly apply titles and pay that do not stand the test of time and that maintain or exacerbate inequity, we are confident in this step that we have taken. We were already including salary ranges in our job descriptions, but today, our staff additionally have the transparency of knowing not only ranges, but how the ranges were developed for each job level. We have also decreased rewarding negotiation skills, another factor that has contributed to pay gaps.
Nonetheless, even with this step, our work is far from over. We continue to regularly assess our compensation and benefits, and while this was a huge step, this is not enough to make all of our staff whole in the broader environment.
The Goal: Equity
As much as we want to, we are not able to single-handedly undo the generations of oppression and discrimination that have caused, maintain, and increase the racial and gender wealth gaps. Further, our compensation audit is but a grain of sand in the desert of closing the racial wealth gap, as more extraordinary measures are needed.
Salaries alone do not create wealth, especially when many of our staff are first-generation college graduates, primary financial supporters and caregivers in their families, and many other identities that have been historically and presently excluded. What’s more, this work comes during a time where student loan debt cancellation, the great resignation, quiet quitting, the impact of work on caregivers—largely women—flexibility and work life balance, and others are national topics of discussion. It’s precisely because of the recognition of these moments we are in, that we share our experience.
Compensation is a major consideration and remains a taboo subject, especially with organizations afraid of potential legal liability and their own unique context and budget considerations. However, we know that collectively, we can make choices that allow us all to do better. We can each do our part when we begin to center employees rather than prioritizing capitalism above all else, so that the millions of nonprofit staff, many of whom are BIPOC, can experience workplaces that are just and that do not exacerbate the historical and present harms we face. With Black Women’s Equal Pay Day soon approaching on September 21, we invite you to join us in taking proactive steps to pay equitably.