2014 Compensation and Benefits Executive Summary. Southern & Central California Nonprofit Organizations

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1 2014 Compensation and Benefits Executive Summary Southern & Central California Nonprofit Organizations To learn more about the Survey and other CNM services devoted to building better leaders, visit us at Find fast answers to other frequently asked questions at

2 2014 Compensation and Benefits Survey Southern and Central California Nonprofit Organizations 2014 Center for Nonprofit Management All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopy, recording, xerography, or by any information storage or retrieval system without permission in writing. Center for Nonprofit Management 1000 N. Alameda Street, Suite 250 Los Angeles, CA phone: (213) fax: (213)

3 Table of Contents Table of Contents Table of Contents... i I. Executive Summary... 1 Participants... 1 Major Findings... 1 Increase in Salary Budgets for Lack of Employee Retention Methods... 1 Health Insurance Premiums... 2 Retirement Benefit Funding Strategies... 2 Future Cost-Reducing Actions... 3 Employers Are Hiring Center for Nonprofit Management Page i

4 Executive Summary I. Executive Summary Participants In 2014, 509 nonprofit organizations in Southern and Central California participated in the Survey, which is the largest sample to date. These organizations provided comprehensive information on compensation and benefits for positions common to nonprofits. Major Findings Many organizations are projecting some positive trends, including salary increases and the hiring of new employees. Organizations are also facing challenges, including the inability to retain their top performers and continued cuts to salaries and benefits as part of their cost-reduction strategies. Increase in Salary Budgets for Over half of organizations (61%) budgeted a median salary increase of 3% in Most organizations (80%) base this increase on the cost of living, 30% base it on merit or performance, 18% give increases across the board, and 16% award increases on length of service; 39% of nonprofits will not provide salary increases, a decrease from 42% in See Table 1 for historical data. Year Table 1. Salary Budget Increases Median Increase Organizations Not Providing Increases % 39% % 42% % 29% % 32% % 29% % 36% % 7% % 11% Lack of Employee Retention Methods Only 12% of organizations have formal retention strategies that help them retain their top performers. The most common non-cash compensation strategies include holiday parties, flexible work schedules, and gift cards, flowers, cards, or other small gifts. Most organizations also pay for employees to attend professional development classes (94%), go at professional conferences (96%), and have memberships to professional organizations (75%). However, a third (32%) of organizations are struggling to retain their top performers, mostly because of their inability to offer competitive salaries (49%) or because of excessive workloads/burn-out (18%) Center for Nonprofit Management Page 1

5 Executive Summary Health Insurance Premiums In 2014, the cost of health insurance decreased by 16% (down to $906 in 2014 from $1,080 in 2013). Despite this decrease, the cost of health insurance per employee is still much higher when compared to prior years. However, the Survey s participant base changes from year to year, and the decrease was probably affected by this change. See Table 2 for historical data. Table 2. Health Insurance Cost Fluctuations Year Cost Per Employee Increase 2014 $906-16% 2013 $1,080 19% 2012 $907 16% 2011 $783 10% 2010 $710 67% 2009 $426 3% 2008 $412 10% 2007 $375 In addition, there is a continued erosion of health insurance benefits, with only 39% of organizations paying 100% of an employee s health insurance premium. This is a 31% decrease since last year, when 51% of organizations did so. Retirement Benefit Funding Strategies In 2014, fewer organizations offered retirement benefits to their employees (down to 57% in 2014 from 64% in 2013). Of those that did, funding strategies were similar to those noted in 2013 (Table 3). Almost half the organizations (46%) that provide retirement benefits contribute and/or match the contributions of their employees; 25% of organizations contribute to their employees benefits and the employees may also choose to contribute. Other organizations also exist where the employee solely contributes (20%) or where the organization solely contributes (5%). Table 3. Retirement Benefit Funding Sources Funding Source Retirement Benefits Percent in 2014 Retirement Benefits Percent in 2013 Employee contribution only 20% 26% Organization contribution only 5% 7% Organization contributes/employee may contribute 25% 21% If employee contributes, organization contributes 46% 41% Other 5% 5% 2014 Center for Nonprofit Management Page 2

6 Executive Summary Future Cost-Reducing Actions For organizations to keep their doors open, many have been forced to reduce the costs of benefits offered to their employees, trim employee salaries, and cut employee hours. On average, 47% of organizations were forced to increase employee contributions to their health benefits. In addition, 36% asked employees to volunteer to reduce their hours or even made such reductions mandatory (33%). Almost a third (29%) of organizations reduced base salaries for their employees. Employers Are Hiring Close to half of organizations (47%) are looking to hire more staff, up from 43% in Fewer organizations (19%) reduced the number of staff in the last twelve months, down from 26% in Many organizations are looking to hire non-exempt staff (76%) and 52% are seeking to hire exempt staff and managers. Another 9% are looking to hire executive staff (e.g., vice president, chief operating officer, chief executive officer) Center for Nonprofit Management Page 3