Recently, the Fremont City Council voted to exempt nonprofits from having to pay the city minimum wage when it rises to $15 an hour in 2020 because they fear nonprofits will not be able to afford to pay employees at the increased salary level. Unfortunately, they’re not necessarily wrong. According to Nonprofit Finance Fund’s 2018 State of the Nonprofit Sector Survey, 63 percent of respondents from the San Francisco Metro Area say offering competitive pay is a top challenge.
Nonprofits are on the front lines addressing our society’s most important needs. It is unfair to expect nonprofit employees to shoulder outsized burdens and downsized salaries. We must pay nonprofits and their employees fairly if we expect them to deliver on the missions our communities rely on them to achieve.
Nonprofit employees are not volunteers. They don’t get to pay less for rent, food, childcare, or a BART pass because they work at a nonprofit. That they may feel a moral imperative to contribute to our community should be respected, not exploited. No one suggests that a doctor should make less if they enjoy helping people. Denying nonprofit employees a decent salary is devaluing the work that this city needs to operate.
In our work, we’ve gone deep into the books of hundreds of Bay Area nonprofits, and the council is spot-on in identifying some of the systemic challenges that prevent many nonprofits from being able to fairly compensate staff. Instead of using those as an excuse to shortchange nonprofit workers, we need to address the real problem. Governments rely on nonprofits to deliver critical services that improve our lives and communities, but often don’t pay fairly.
Nonprofits often lack the ability to pay market-rate salaries because they can’t obtain contracts that fund the full cost of doing the work they’re expected to do. In the 2018 Survey, 64 percent of San Francisco area respondents said obtaining funding for full costs was a leading operational challenge. City council members who supported the exemption even agreed that nonprofits do not get adequate funding from federal and state government contracts. Nonprofits fill critical gaps in services that the government can’t, yet they struggle to be sufficiently paid for their work. This threatens the quality of services and minimizes the ability of nonprofits to employ skilled people willing to work for the salaries the organizations can afford to pay.
When nonprofits are forced to accept contracts that don’t cover full costs, it makes it harder for them to pay employees, cover rent, make needed repairs, and do all of the other things required to run an effective organization. And if demand for services increases, then the gap between what they are being paid, and what it costs to operate, grows. Many Bay Area nonprofits have been stretched to the breaking point. We have to ask ourselves, if housing, health, education, arts, and all of the other things we trust nonprofits to provide are truly important to our community, how can we better support those doing this critical work?
Government officials can stand up for nonprofit workers by advocating for a system were contracts pay the actual costs of what is required to deliver quality services. Nonprofit employees could afford to live in the Bay Area communities where they work, their extensive experience and skills would be valued, and there would be no need to exempt nonprofit organizations from the city of Fremont’s minimum wage mandates.
Sandi McKinley is vice president of the Nonprofit Finance Fund.