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Working in a nonprofit organization brings both material and nonmaterial rewards. Although some nonprofit organizations do not pay (or are unable to pay) market wages, the benefits of working in a nonprofit often outweigh the drawbacks for many employees.
In the United States, nonprofit or charitable organizations such as foundations, churches, arts organizations, universities, and even some hospitals, are exempt from federal income taxes. Although the range of their services is rather broad, these groups have in common a mission to provide a benefit to a constituency that is more important than bottom-line profits. Therefore, endowments and annual giving, rather than the sale of stock or debt, typically support their operating budgets. Even though their tax status may suggest otherwise, nonprofit organizations can be financially successful.
Types of tax-exempt organizations
Base salaries at the strongest nonprofits rival those at for-profit corporations, and some nonprofits even conduct or participate in compensation studies to ensure their ability to compete for the best talent, especially in regions with strong economies. For example, the Massachusetts Institute of Technology (MIT) recently completed a rigorous study of its compensation practices and adjusted the pay ranges for many jobs as a result.
Employees of nonprofit organizations don't receive stock options, since there are no shares to own, and they are often ineligible to receive bonuses since there are no profitability targets to reach.
Instead, they often receive attractive benefits packages which could include generous vacation time and sick pay, low premiums on medical and dental insurance, good retirement plans, tuition reimbursement, and sometimes a convenient or flexible work schedule without significant overtime. Universities are also able to offer the use of facilities such as gyms and libraries, and sometimes membership in credit unions with guaranteed low-interest loans and other attractive features.
Inventive perks lure executives to nonprofits
The government pays generous benefits
The government is one of the few employers of any type that provides employees with rich retirement and health and welfare benefits. The federal government still provides free family health and welfare benefits at zero cost to employees - very rare in corporate America. Moreover, government employees can retire at age 55 and still receive a pension benefit equal to 60 percent of final pay if they have 30 years of service. This pension benefit is cost-of-living-adjusted, protecting it against inflation.
In the private sector, employee retirement benefits are normally reduced by 50 percent or more for retiring at 55. Corporate pension benefits are rarely subject to cost-of-living adjustments, so the value of the benefit decays over time because the dollar amount is fixed. Further, the prevalence of such pension plans has been steadily declining in the past ten years.
Nonprofits create jobs for people with skills that benefit
- Dwight Ueda, Salary.com contributor
Copyright 2000-2004 © Salary.com, Inc.
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