Our Perspective

Nonprofit organizations are driven by a mission to create positive change in society. However, when it comes to pay disparities in nonprofit leadership roles, there is often a misalignment between the organization’s values and its practices. Addressing pay disparities is not only a matter of fairness but also crucial for attracting and retaining diverse talent. In this blog, we will explore the importance of equity in nonprofit leadership compensation in the Canadian context and strategies to address pay disparities.

1. Conduct a Pay Equity Audit: To address pay disparities, Canadian nonprofits must first understand the extent of the issue within their organization. Conducting a comprehensive pay equity audit is essential to identify any gaps in compensation based on gender, race, or other factors. This audit should include an analysis of salaries, benefits, bonuses, and other forms of compensation. By identifying disparities, organizations can take targeted action to rectify them.

2. Establish Transparent Compensation Policies: Transparency is key to ensuring equity in nonprofit leadership compensation in Canada. Establish clear and transparent compensation policies that outline the factors considered in determining salaries, such as experience, qualifications, and performance. Communicate these policies to all employees to foster trust and understanding. According to a report by Charity Village, only 35% of Canadian nonprofits have a written compensation policy. Transparent policies help eliminate biases and ensure that compensation decisions are based on objective criteria rather than subjective factors.

3. Implement Pay Equity Adjustments: Once pay disparities are identified, it is essential to take action to rectify them. Implement pay equity adjustments to bring salaries in line with the organization’s commitment to equity. This may involve increasing the salaries of underpaid individuals or adjusting the compensation structure to ensure fair and equitable pay across all leadership roles. Regularly review and update compensation to address any emerging disparities. According to a study by the Canadian Women’s Foundation, 60% of Canadian nonprofits have made changes to their compensation practices to address pay disparities.

4. Prioritize Equal Pay for Equal Work: Ensure that equal pay for equal work is a fundamental principle within the organization. The gap between compensation for men and women in the nonprofit sector in Canada continues to show men earning more than women at the most senior management level. Although the wage gap is relatively small (5% or less) for most levels, there remains a significant wage gap at the Chief Executive level, where average compensation is 26% higher among men than women. Regularly review job descriptions, responsibilities, and performance evaluations to ensure consistency and fairness in compensation decisions. By prioritizing equal pay for equal work, Canadian nonprofits can work towards closing the gender pay gap.

5. Foster a Culture of Pay Equity: Creating a culture that values pay equity is crucial for long-term change in the Canadian nonprofit sector. Educate employees about the importance of pay equity and the steps the organization is taking to address disparities. Encourage open dialogue and feedback to ensure that employees feel comfortable raising concerns about pay equity. By fostering a culture that prioritizes equity, nonprofits can create an environment where pay disparities are actively addressed and eliminated.

Addressing pay disparities in nonprofit leadership is a critical step toward creating a more equitable and inclusive sector in Canada. By conducting pay equity audits, establishing transparent compensation policies, implementing pay equity adjustments, prioritizing equal pay for equal work, and fostering a culture of pay equity, nonprofits can take concrete actions to address pay disparities.

Michelle Okere, CFRE, is Principal of Okere & Associates and a Search Advisor at crawfordconnect. You may reach her at michelle@okereandassociates.com.