Why Do Non-Profit Grants Often Not Include Salaries?

Usually, a non-profit organization works for the people in society who need financial aid and other types of help. The main purpose of a non-profit organization is to do better for society and therefore, no part of the organization’s income is distributed to its members, directors, or officers. Many non-profit organizations put a cap on administrative funding to make sure the funds are used for the right causes.

What is a Non-profit Organization?

According to Wikipedia –

“A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in contrast with an entity that operates as a business aiming to generate a profit for its owners. A nonprofit is subject to the non-distribution constraint: any revenues that exceed expenses must be committed to the organization’s purpose, not taken by private parties.”

Usually, this type of company receives tax-exempt status from the Internal Revenue Service (IRS) because it is working for a social cause. A non-profit organization can be a corporation, an individual enterprise, an unincorporated association, a partnership, a foundation, or a condominium. Generally, a non-profit organization includes churches, public schools, public charities, public clinics and hospitals, political organizations, legal aid societies, volunteer services organizations, labor unions, professional associations, research institutes, museums, and some governmental agencies.

Laws Regarding Nonprofit Salaries

According to the IRS tax-exempt status, non-profit organizations are allowed to pay a reasonable salary to their officers, employees, staff, as well as agents for their services. So, it means a non-profit organization can pay salaries to the executive director, accountant, fundraiser, field agent, etc. According to Internal Revenue Service –

“An exempt organization (EO) may have officers such as a president, vice-president, secretary, treasurer, and CEO (chief executive officer). As used here, the term officer includes anyone who holds a position of trust, authority, or command within an organization.

The Internal Revenue Code defines corporate officers as employees for FICA, FUTA, and FITW purposes. However, an officer of a corporation who does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration, is not an employee of the corporation.”

How much a Non-profit can Pay Its Employees?

Well, there are no laws that determine the salary of a non-profit organization. So, the salary of non-profit organizations varies from one organization to another. Moreover, the salary of a nonprofit employee also depends on quite a few things like –

Geographic location
Organization size
Nonprofit type
Duties and responsibilities
Qualifications and experience

In the USA, the average salary of nonprofit employees is $48,688 per year and $23 per hour. The average minimum salary of nonprofit employees is $25,544 and the average maximum is $108,885. Some of the best-paying nonprofit jobs are –

President/CEO – $101,381
Vice President – Operations – $100,340
Director of Technology – $94,768
Vice President – Marketing/Communications – $94,229
Nonprofit Controller – $92,307
Nonprofit Health – $92,199
Director of Advancement – $91,762
Nonprofit Data Science – $91,097
Compliance Officer – $89,945

How much a Non-profit can Pay Its Employees?

Sate-wise Salary Data of Nonprofit Employees

Name of the State	Nonprofit Employee Avg. Salary	Nonprofit Employee Avg. Hourly	Nonprofit Employee Minimum Salary	Nonprofit Employee Maximum Salary	Nonprofit Employee Salary 25th Percentile	Nonprofit Employee Salary 75th Percentile
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming	$43,924 $48,133 $49,803 $49,820 $51,483 $45,950 $48,977 $50,425 $42,390 $44,975 $50,476 $48,262 $49,551 $46,324 $44,281 $44,866 $51,090 $44,911 $49,228 $55,688 $62,457 $49,495 $46,309 $42,028 $52,078 $47,107 $54,603 $47,754 $53,539 $47,357 $43,670 $55,391 $43,119 $47,695 $45,901 $50,748 $45,571 $47,328 $48,358 $52,729 $46,301 $46,236 $47,493 $45,355 $50,432 $53,886 $57,182 $48,143 $45,970 $49,600	$21 $23 $24 $24 $25 $25 $24 $24 $20 $22 $24 $23 $24 $22 $21 $22 $25 $22 $24 $27 $30 $24 $22 $20 $25 $23 $26 $23 $26 $23 $21 $27 $21 $23 $22 $24 $22 $23 $23 $25 $22 $22 $23 $22 $24 $26 $27 $23 $22 $24	$23,635 $26,922 $25,087 $23,793 $26,544 $24,366 $27,178 $25,400 $22,810 $24,201 $28,175 $24,816 $23,664 $24,926 $24,442 $24,979 $24,187 $24,697 $24,797 $27,187 $29,335 $23,811 $25,465 $23,396 $25,236 $25,348 $26,777 $26,711 $28,550 $25,777 $23,871 $29,615 $21,720 $26,610 $25,199 $24,887 $25,404 $25,310 $26,957 $25,488 $25,833 $25,382 $23,923 $24,968 $26,811 $26,426 $29,131 $25,746 $25,139 $26,587	$100,667 $114,669 $106,851 $101,342 $113,057 $108,041 $115,758 $108,186 $97,153 $103,079 $120,003 $105,697 $100,790 $106,167 $104,106 $106,390 $103,018 $105,190 $105,618 $115,795 $124,947 $101,418 $108,464 $99,648 $107,487 $107,963 $114,049 $113,769 $121,602 $109,792 $101,674 $126,140 $92,512 $113,338 $107,329 $105,997 $108,200 $107,801 $114,817 $108,562 $110,029 $108,110 $101,896 $106,342 $114,194 $112,553 $124,076 $109,658 $107,073 $113,241	$34,139 $38,887 $36,236 $34,368 $38,341 $36,639 $39,257 $36,689 $32,947 $34,957 $40,696 $35,845 $34,181 $36,004 $35,305 $36,080 $34,936 $35,672 $35,818 $39,269 $42,373 $34,393 $36,783 $33,793 $36,452 $36,613 $38,677 $38,582 $41,239 $37,233 $34,480 $42,777 $31,373 $38,436 $36,398 $35,947 $36,693 $36,558 $38,938 $36,816 $37,314 $36,663 $34,555 $36,064 $38,726 $38,170 $42,077 $37,188 $36,312 $38,403	$46,831 $53,346 $54,818 $49,820 $58,002 $52,805 $53,853 $55,503 $45,197 $47,953 $55,827 $54,227 $51,709 $49,390 $48,432 $49,494 $52,852 $48,935 $54,186 $59,407 $64,102 $52,030 $50,458 $46,357 $55,145 $50,225 $58,511 $52,927 $56,571 $51,076 $47,300 $58,682 $47,461 $52,727 $49,931 $54,381 $50,336 $50,150 $53,415 $55,696 $51,187 $50,294 $52,276 $49,472 $53,124 $57,744 $63,655 $51,014 $49,812 $52,681
U.S. Average	$48,688	$23	$25,544	$108,885	$36,926	$52,627

FAQs about Why Do Non-Profit Grants Often Not Include Salaries

Can a nonprofit organization pay employees a bonus?

Yes, a nonprofit organization can pay a bonus to its employees as long as it meets the benefit of the organization. Usually, the nonprofit organization pays the salary monthly or hourly and the bonus also depends on how the nonprofit employees get their salary.

Do nonprofits have to pay overtime?

Yes, the nonprofits have to pay overtime. According to the Fair Labor Standards Act, nonprofit organizations must pay overtime to employees and workers who work over 40 hours a week.

How much can a nonprofit get in grants?

Usually, the federal grant varies from one year to another. Usually, a nonprofit gets a grant that might range from $500,000 to millions of dollars.

Who is the highest-paid nonprofit CEO?

James Skogsbergh is the highest-paid nonprofit CEO. He is the CEO of Advocate Aurora Health. He earns $5,964,082 as Chief Executive Officer, President of the board, and Director.