Nonprofit Employee Bonuses
Can nonprofits give bonuses to employees? Yes, bonuses are considered part of overall employee compensation. The IRS guidance allows incentive compensation. However, nonprofit bonuses are likely smaller than at for-profit companies.
Nonprofit Executive Bonuses
Do non-profit CEOs get bonuses? Yes, some nonprofit CEOs may receive performance-based bonuses as part of their compensation package. These bonuses are typically tied to specific goals or targets set by the board of directors.
Comparison of CEO Salaries
Comparison to Private Sector. According to data from the Bureau of Labor Statistics, the average salary for a private sector CEO in 2018 was $186,600. This is significantly higher than the average salary for a nonprofit CEO, which was $125,000 in 2017.
Comparison to Public Sector. According to data from the Bureau of Labor Statistics, the average salary for a public sector CEO in 2018 was $213,400.
Fair Wages for Nonprofit Employees
Another belief is that furthering the mission is enough compensation. While having a sense of purpose beyond a 9-5 job is rewarding, workers are still entitled to fair pay.
Math Favors Employees
Companies with bonus programs offer about 1 percent of payroll. They expect to give bonuses to 25 percent of eligible employees. This allows multiple instant bonuses per year.
Noncash Bonuses
Noncash bonuses like certificates or trophies can improve morale if done right. Employees who excel should be recognized in a special ceremony.
IRS Rules on Nonprofit Executive Bonuses
The IRS has rules for nonprofit executive bonuses: 1) Bonuses should further the nonprofit’s goals and tax-exempt purposes; 2) The bonus plan should be based on measurable performance goals.
Referral Bonuses
Referral bonuses encourage employees to recommend candidates for open positions. They’re usually at least $1,000. The bonus isn’t given until the new hire stays for several months.
Holiday Bonuses
Also called a “13th-month salary,” a holiday bonus recognizes a year of hard work. It also gives employees an extra boost during the holidays.
Benefits of Giving Bonuses
Bonuses can increase motivation and make employees work harder to reach targets. Consider defining performance goals before giving rewards.
Early-Stage Startups and Bonuses
Startups without much funding are unlikely to give yearly bonuses. There’s too much instability and insufficient funds. Instead, they offer equity. This is less risky and can pay off if the company succeeds.