Paying staff fairly in a nonprofit costs less than turnover

Aug 29
3 min read

Updated: 2 days ago

Introduction

Charity salaries are held down because paying properly feels like money taken from the cause. Staff accept it because they believe in the work, and everybody treats the arrangement as a form of commitment.

Then the experienced person leaves for a role paying substantially more, the organisation spends months recruiting, the new person takes half a year to become effective, and relationships built over years have to be rebuilt. Underpayment is rarely the saving it appears to be, and it falls hardest on the people least able to absorb it.

1. Paying staff fairly in a nonprofit is a financial argument as well as an ethical one

Make the case in the terms the board uses.

Recruitment costs, months of reduced output, lost relationships and institutional knowledge, and the management time consumed by repeated hiring. Set against the salary difference, turnover is usually the more expensive option.

2. Recognise who low pay excludes

The consequence that gets least attention.

Roles paying poorly can only be filled by people with another income, savings or family support. That systematically narrows who can work for you, often excluding the people with direct experience of the issue you exist to address.

3. Find out what the role is actually worth

Benchmark rather than guess.

Comparable roles in similar organisations, and in other sectors locally for transferable skills. Many charities discover they are paying well below both, having set the figure years ago from what was affordable at the time.

4. Budget salaries as a cost of delivery

The framing that changes the conversation.

Staff are how the work happens, not an overhead competing with it. A budget presenting salaries as administration and delivery as the cause has already set up the wrong trade-off.

5. Include full costs in every funding application

The practical route to affording it.

Salaries, on-costs, pensions and a fair share of overheads, at a realistic level. Applying with artificially low figures commits the organisation to underpaying for the duration of the grant.

6. Be transparent about pay internally

Opacity breeds resentment in small teams.

A clear structure explaining how roles are graded and how progression works. In an organisation of eight people, differences are noticed, and the absence of an explanation is filled with assumptions.

7. Do not rely on goodwill to cover the gap

The unspoken part of many charity roles.

Unpaid overtime, taking work home, and covering vacancies indefinitely. Depending on this is a real cost being paid by individuals, and it is the most reliable route to losing them.

8. Meet your legal obligations without exception

There is no charitable exemption from employment law.

Minimum wage, working time, holiday, pensions and contracts apply as they do anywhere. Volunteers must genuinely be volunteers rather than unpaid staff, and the distinction is a legal one with real consequences.

9. Offer what you can where pay is constrained

Be honest about the limits and generous within them.

Flexibility, development, autonomy and genuinely reasonable hours are valued and cost little. What does not work is offering purpose as a substitute for pay somebody cannot live on.

Review salaries annually even when you cannot increase them. A quiet freeze that nobody explains reads as indifference, while an honest conversation about what the organisation can and cannot do is generally understood.

Conclusion

Make the financial case alongside the ethical one, because turnover usually costs more than the salary difference.

Recognise that low pay narrows who can work for you and often excludes people with lived experience, benchmark what the role is genuinely worth, budget salaries as the cost of delivery rather than as overhead, apply for full costs including on-costs and overheads, explain your pay structure internally, stop relying on unpaid goodwill to cover gaps, meet employment law in full because charitable status changes none of it, and offer flexibility and development honestly without presenting purpose as a substitute for a living wage.