Dear Funders: Nonprofit Salaries Make Impact Possible
As a funder, you have important decisions to make about where your dollars can do the most good. With more needs than any one grant budget can meet, it makes sense to ask how funding will benefit the people and communities a nonprofit serves. The way we think about the costs of that work can shape which organizations and activities receive support.
One concern that comes up in discussions about general operating support is that too much of the money will go toward salaries. There’s an assumption underneath that concern that deserves a closer look: that paying staff takes money away from accomplishing the mission. For many nonprofits, staff time and expertise account for much of what it takes to deliver their services.
As a grant professional, I want to make the case for including those people in how we think about impact. That means understanding the work their salaries pay for and recognizing that they deserve fair compensation for doing it. If we want nonprofits to provide dependable services, your funding decisions need to reflect what it takes to make those services available.
People Do the Work You Want to Fund
Consider an advocate at a domestic violence organization. Their work might include helping a survivor develop a safety plan, finding available housing, coordinating with other service providers, and following up when circumstances change. The value of that support depends on the advocate’s knowledge, judgment, and ability to build trust.
Their salary pays for the time and expertise that make those services possible. If we want someone available to do that work consistently, we need to include their compensation in what we’re willing to fund. The same applies to many of the services nonprofits provide, where a person’s sustained attention is central to the work.
A food pantry needs food, an arts organization may need performance space, and a transportation program needs vehicles. Those resources need people to put them to use: someone to organize food distribution, produce a performance, or drive people to their appointments. Even when volunteers contribute much of that work, recruiting and coordinating them takes time. Paying the staff who make those connections is part of getting the benefit of an investment to the people it’s intended to serve.
Fund the Full Cost of Nonprofit Programs
Imagine a nonprofit receives funding to renovate a childcare center. The classrooms are ready, the equipment is in place, and families are eager to enroll. There’s a clear, tangible result for the funder to point to.
Now the center needs enough qualified teachers to care for the children who enroll. It also needs someone to manage schedules, communicate with families, and handle the decisions that come with running the program. Parents can only rely on that care if the organization can keep it staffed and operating.
If the grant covers renovations but excludes personnel, the organization still has to find funding for those positions. The cost doesn’t disappear because it falls outside the grant’s guidelines. Until someone covers it, the center may have to limit enrollment or delay opening.
You don’t have to cover every expense to make a useful contribution. Understanding the full cost of the work helps you see where your grant fits and what else the organization needs to carry it out. If you’re funding an expansion of services, that conversation should include whether the organization can afford the people needed to deliver them.
Salaries Aren’t the Same as Overhead
Part of the confusion comes from treating salaries, overhead, and general operating support as though they all mean the same thing. They describe different aspects of a nonprofit’s finances. A salary tells us what the organization is paying for; the work that person does determines how the expense is classified.
A teacher’s time providing childcare, for example, is a personnel expense associated with delivering that program. Staff time spent on financial management or fundraising serves a different function. The National Council of Nonprofits explains these expense categories and why overhead alone is a poor measure of effectiveness.
General operating support gives an organization flexibility to use funding across its mission. As Grantmakers for Effective Organizations explains, that support can help cover staffing and other resources needed to sustain the work. Program grants can also pay salaries when their terms allow it.
So a preference for program funding doesn’t make the work any less dependent on paid staff. It changes which expenses the grant can cover and how the organization must account for them. We still need to ask whether the funding available is sufficient to do the work well.
Organizations Also Need People to Keep the Work Running
It’s easy to see how a teacher or advocate contributes to a nonprofit’s mission. The connection may be less visible for the person managing payroll, preparing financial reports, or coordinating volunteers. Those responsibilities still affect whether services are dependable and whether the organization can meet its commitments.
When you ask nonprofits to manage money responsibly and demonstrate results, you’re asking them to invest staff time in those responsibilities. Doing that requires people with enough time to maintain accurate records, understand what the information means, and use it to make decisions. Those tasks need room in the budget alongside the services being measured.
The same is true of planning. A board can approve a thoughtful strategic plan, but staff need time to carry it out. If everyone’s existing workload already fills the week, adding new priorities requires a decision about staffing, timing, or what other work will change. Funding that supports implementation helps turn those plans into work the organization can actually accomplish.
Fundraising belongs in this conversation, too. When you ask how a program will continue after the grant ends, part of the answer may depend on someone building donor relationships, researching funding opportunities, and developing proposals. That work takes time and expertise, along with systems for tracking relationships and following through on commitments. It needs funding well before the next gift or grant arrives.
If you’re asking nonprofits to ensure their programs are financially sustainable, supporting the work that makes that possible should be part of the conversation. Excluding fundraising expenses while expecting an organization to develop new sources of revenue leaves it responsible for the result without helping cover the cost of getting there. General operating support or dedicated investment in fundraising staff and systems can help an organization act on its sustainability plan. Future funding is never guaranteed, but paying for the work needed to pursue it gives that plan a more realistic foundation.
Meaningful Work Still Deserves Fair Pay
There’s also a basic fairness issue here. People who work in nonprofits deserve to be paid fairly for their work, including the skills and experience they bring to it. The fact that their work benefits society doesn’t make their time worth less or their own financial needs less important. We shouldn’t expect them to accept inadequate pay because they do work that they care about.
Someone working on cancer research or helping people find stable housing needs to earn a living just as someone developing software, managing investment accounts, or delivering food does. Fair compensation will vary by role and responsibilities, but choosing work that serves the public shouldn’t come with an expectation of personal financial sacrifice. People should be able to build a career in this sector without being asked to subsidize its work through low wages.
“Warm fuzzies” aren’t a valid part of a compensation package. They don’t reduce a mortgage or rent payment, pay for groceries, or put gas in the tank. Finding meaning in your work can make a job rewarding, but it doesn’t change what it costs to live. We can value that fulfillment and still insist that the work deserves fair pay.
Compensation also matters for whether organizations can keep providing services. In the Center for Effective Philanthropy’s State of Nonprofits 2025, more than half of responding nonprofit leaders said their biggest staffing challenges stemmed from insufficient funding to recruit, retain, and support staff. In its 2026 report, 45% of responding nonprofit CEOs cited staffing as their organization’s biggest challenge. These findings don’t mean that inadequate pay explains every staffing problem. They do give funders a reason to examine whether their grant terms help organizations afford the people they need.
Accountability Starts With Understanding the Work
You should ask whether a staffing plan makes sense and whether compensation is appropriate for the responsibilities. You should also ask what the organization is accomplishing and what it’s learning. Paying salaries doesn’t automatically establish effectiveness, just as keeping salary expenses low doesn’t establish efficiency.
A small personnel budget could reflect a service model that needs relatively little paid staff time. It could also reflect vacancies or a budget that leaves necessary work unfunded. You can’t tell which by looking at the amount alone.
General operating support can come with clear goals, financial transparency, and useful reporting. GEO’s guidance makes the point that evaluating progress matters for both restricted and unrestricted grants. You can give nonprofit leaders flexibility while still having substantive conversations about results and the resources needed to achieve them.
A Short Checklist for Funders
When reviewing a nonprofit’s staffing costs, ask:
What work will these positions support? Look at the responsibilities and how they contribute to services or organizational needs.
Is the staffing plan realistic and fairly compensated? Consider whether the proposed hours, pay, and benefits support recruiting and retaining people with the expertise the work requires.
What does the full work cost? Include the shared expenses that keep programs running, and ask how costs outside your grant will be covered.
Could our grant terms better support delivery? Consider general operating support, appropriate personnel and indirect costs within program grants, or multiyear funding where you have that flexibility.
How will we assess progress? Agree on useful measures that reflect the nature and quality of the work.
These questions give funders more to work with than a concern about how much money goes toward salaries. They also give nonprofit leaders an opening to explain what their teams need and where the budget doesn’t yet cover it. That’s a conversation worth making room for before deciding what to fund.
When a grant helps pay an advocate, teacher, or case manager, it helps make their work available to the people who need it. Funding the staff who keep the organization running supports that work, too. If we want nonprofits to deliver on their missions, we need to be willing to fund the people responsible for doing it.
Support the People Behind the Impact
If you want to help your grantees plan for the staffing and funding their programs need, I offer training and workshops for funder-hosted groups. I can tailor sessions to help participants develop grant-ready budgets, set realistic outcomes, and explain the resources needed to deliver their work. Get in touch through the training page or book a call with me to discuss a session for the nonprofits you support.
Explore Related Topics:
