Nonprofit consultant Esther Saehyun Lee recently published an excellent article at Candid’s Blog, entitled “Are nonprofit leaders unknowingly taking a ‘scarcity vow’?“. I recommend it to nonprofit board members, donors, and anyone else who cares about the health of the nonprofit sector.
The article reminded me of a conversation I had several years ago, when a friend called and asked me to help his Chamber of Commerce committee draft a policy for choosing nonprofits to receive small grants. They needed some standards, he told me, because he had learned that one of last year’s recipients paid its CEO $115,000.
To make sure I understood the problem, he added: “That’s six figures!”
I told him that I knew the organization and the CEO, and that the CEO was leading a large, complex, highly effective organization with an incredible record of success. The salary was not out of line. In fact, I told him, the CEO probably deserved more.
That attitude is not rare. Many nonprofit leaders have buckled to such expectations and have learned to ask for less than they or the work need. Less compensation. Less staffing. Older, less effective technology. Less time off to recover. Less permission to treat their job like a “normal” job.
Some boards admire this self-denial as dedication. It usually is. But it is also a warning sign about sustainability. A CEO who quietly absorbs every shortage may be unintentionally masking serious long-term risks: burnout, turnover, weak succession planning, underinvestment, and eventually diminished mission impact.
This is especially important when boards evaluate CEO performance and compensation. The question should not be, “Is our CEO willing to sacrifice enough?” The better question is, “Are we paying for the quality of leadership we are receiving? Are our expectations are reasonable?”
Good governance requires more than frugality. It requires clarity. That means boards should be willing to ask: Are we evaluating the CEO against realistic expectations? Are we compensating the role responsibly, using relevant information rather than instinct or status quo?
Are we treating under-capacity as a leadership failure when it may actually be a resource problem? Are we giving the CEO useful feedback, or merely asking them to keep doing more with less?
Nonprofit CEOs can be mission-driven and still expect fair compensation, useful support, and reasonable expectations.. They should be accountable. They should be evaluated thoughtfully. But, as Esther Saehyun Lee capably points out, they should not have to take a vow of scarcity to be considered worthy of the work.
Nonprofit Boards have a responsibility to protect the mission. One way they do that is by taking the CEO role seriously enough to evaluate it fairly, compensate it reasonably, and talk honestly about what sustainability and growth actually require. A board that confuses underpayment with virtue is not being prudent. It is outsourcing the organization’s financial stress to the person responsible for holding everything together.