I'm Founding a Nonprofit. Should I Pay Myself?

Sometimes I feel like I'm a broken record. (Kids, that was the iPod from the 1970s.) I can't tell you how many times I've sat down with the founder of a non-profit and discovered that they're not paying themselves anything. Most of them can't afford to work for free. But more importantly, we all can't afford for great social entrepreneurs to burn out and abandon their high-impact ventures because they just need to cut a salary already.

Don't get me wrong. Most entrepreneurs need to spend some time bootstrapping. For profit and non-profit leaders often put their end-goal first, and themselves last. There are a few very good reasons to do this, but there are also some bad reasons why some founders continue to go unpaid long after the "start-up" phase has ended.

On the smart side, some leaders want to get their organization off the ground, demonstrate impact, and validate their worth without draining resources during the critical early stages. Others may believe that the organization's ultimate success (and their ultimate payoff) will increase if they hold off and leverage all resources toward growth.

But sometimes even after an organization has stabilized, founders take no funds or radically less funding than they deserve. I have a few theories about why this is happening.

1. It feels dirty to raise money to pay for yourself.

Let's go there. When your program is just you and a couple of volunteers, it can feel awkward to raise funds. When people ask you what the money is going toward, it can feel uncomfortable to say..."uh...it's going toward paying my salary." The thing is, if you are implementing 100% of the program outcomes, you are the program. What are all of the organizational functions you implement? Those are what you are raising money toward. You run a nonprofit that teaches schools how to compost? What are your costs? Well...there's the composting bins, a couple raw materials, and...you. You, the person who spends 40% of your time recruiting and training students. 30% of your time building composting infrastructures at schools. 10% of your time educating teachers, principals, and parents, and 10% of your time fundraising. When you ask for funds, you're not asking for your salary. You're asking for someone to enable the organization to buy materials, recruit and train students, build composting infrastructures, educate teachers, principals, and parents, and build community support for the endeavor. It wouldn't be dirty if you hired someone to do all of that work for you so that you could launch another site. All of a sudden it would be really easy to justify the cost, and the programmatic value. So cut it out, and value your own contributions.

2. There isn't enough money to cover program costs and salaries.

This is a real barrier for many organizations, but in reality, it is a false question. Leaders who put themselves last automatically assume that all money must go to every other possible item before they get paid a thing. In reality, every program element is a choice. And each program element comes with a cost...including the cost of implementation and staffing. If your organization works with 150 foster children, and you host 4 large initiatives each year, each of those initiatives (and each child you work with) comes at a cost. And each initiative and child is associated with a staff member who makes the program happen. If you don't have enough money to pay your staff for all of the programs you'd like to run, then you'll need to figure out how much of a program you actually can afford to implement. Perhaps you can only afford to pay for two initiatives when you pay staff (or yourself) to do the work. If so, then you'd better raise some more money, or scale back how much your organization tries to do.

3. You don't know how to value your worth.

Some for-profit entrepreneurs underpay themselves, while still paying their other employees full salaries. This makes sense because as an owner of a potentially profitable business, there is long-term gain ahead if the business thrives. Hiring quality talent leads to a better outcome, and most talented employees won't come along for the ride without either fair salary or meaningful equity options. But for some reason, nonprofit leaders who don't face the option of getting rich off of their ventures, still choose to pay their new-hires far more proportionally than they will pay themselves. As the leader, you have to ask yourself how much value you bring to the table. Are you really only 10% more valuable than your employee? How much would you pay someone to come in and take over your job if you had to leave? How much do similar organizations pay their leaders? If you feel too humble to put a value on your own worth, scout job postings for comparable organizations, talk to headhunters, and review sites like Glassdoor to understand what organizations of similar size and scope would pay someone of your expertise. But don't underpay yourself just because you feel uncomfortable talking about money.

Don't get me wrong. There are a lot of people selling Brooklyn Bridges out there. We've all met founders of organizations that seem like they're really just employment agencies for friends and family with no real meaningful impact on society. But for those of you out there who have launched high-impact nonprofits that have demonstrated true value and sustainability, it's time to graduate to the next level. Treat yourself and your organization with respect, and pay yourself like what you're running is a real venture. Because it is.