The work of human service nonprofits is undervalued and underfunded, partially due to inadequate government funding structures. Common funding structures often fail to account for the real labor and emotional cost required in these jobs and force organizations to shoulder costs while they wait for reimbursements. These are among the findings of a report published in May by the Nonprofit Association of Oregon (NAO) and the Coalition of Communities of Color’s (CCC) Research Justice Institute, based on interviews with staff at human service nonprofits across Oregon.
The qualitative report followed NAO’s 2024 quantitative study with ECOnorthwest that used government-reported data to reveal a significant wage disparity between nonprofits in Oregon and similar services in the for-profit and public sectors.
In the interviews conducted, executive directors and employees alike reported consistent experiences of their work’s devaluation, from having to contend with insufficient resources to experiencing deep-rooted bias about their sector. The report explored solutions to minimize these disparities and reinvigorate people’s desire to continue working in the nonprofit sector.
Unfair Funding Models
Just as social service nonprofits are reliant on government contracts and grants to finance their work, the government depends on these organizations to extend their vital services to a wide range of communities. When nonprofits cannot afford to accept government funding offers without adequate financing, communities ultimately feel the result of this strain.
Government funding models often offer nonprofits a flat funding rate over several years, which increasingly undercompensates overtime as inflationary pressures worsen.
In a conversation with NPQ, NAO’s Executive Director Jim White and Director of Public Policy Phillip Kennedy-Wong said that government funding models often offer nonprofits a flat funding rate over several years, which increasingly undercompensates overtime as inflationary pressures worsen. Kennedy-Wong explained that, for example, when comparing a nonprofit that received a grant five years ago with one that receives funding today, the former would get less compensation for the same service because its grant would reflect the costs of living from five years ago.
“We have had nonprofit executive directors who said there are certain grants or contracts that they won’t apply for because of how those grants or contracts are structured,” Kennedy-Wong told NPQ. “It’s pretty damning in the sense that they’re in these areas of high need. We’ve had, for example, a director tell us that because of all the stipulations in this particular contract, that they couldn’t pencil out wages that would actually attract workers to want to apply for those jobs.”
The report also credited the wage disparity to government agencies reimbursing nonprofits after their work is complete and failing to pay them on time, forcing the organizations to “eat the cost” of performing their jobs.
Underfunded and Uncompensated Labor
In the report, researchers discussed how the stereotypical association between human services work, the domestic sphere, and the duties of women and people of color also play a role in the underfunding of the sector today. They advocate for a “comparable worth” perspective on wage inequity, which would take the legacy of oppression into account when finding solutions.
Nonprofits delivering “culturally specific and responsive” services are particularly susceptible to wearing multiple hats and performing uncompensated labor. For instance, employees may serve as both translators and service workers but only receive the wage for one of those jobs. Nonprofits tend to focus on their staff earning certifications for a more competitive wage, while government agencies often prioritize formal education; both undervalue workers with cultural knowledge and lived experiences.
Human service workers are also often exposed to high levels of stress and trauma as they work with communities facing violence and other challenging conditions, which similarly goes unrecognized and uncompensated. Mira Mohsini, senior researcher at the Research Justice Institute, said that to achieve adequate compensation for the traumatic toll that human service nonprofit workers experience, the first step is to acknowledge these hardships.
“Just the act of confirming and validating the widely held experience of how this work is so emotionally taxing is, in itself, something that needs to be furthered. It needs to be invested in, and we need to surface this reality.”
“When we presented [our findings] to the members of the nonprofit association, folks were like, ‘we’re not surprised that this is in the report—there’s nothing new here, but we feel validated,’” Mohsini told NPQ. “Just the act of confirming and validating the widely held experience of how this work is so emotionally taxing is, in itself, something that needs to be furthered. It needs to be invested in, and we need to surface this reality.”
The report also describes that government agencies often disregard the nuances between urban and rural nonprofits, expecting rural organizations to be more “progressive and advanced” than they are by asking them, for example, to sign equity agreements. Payments to rural organizations should also be flexible enough to include overtime since, as Mohsini explained, they often operate from multiple locations so that they can provide their service to more people because populations are more dispersed.
Reporting requirements of government contracts and grants may not reflect that, however, so rural nonprofits end up employing additional uncompensated labor to manage their locations.
Gaps in Pay Equity
Human service nonprofits’ pay equity gap, which describes the ratio between the highest-paid nonprofit executives’ salaries and the lowest-paid workers’ salaries, are often unsustainable. In the report, the authors suggested that government agencies should keep nonprofits accountable when allotting grants and contracts, incentivizing the organizations to establish a more equitable pay ratio so their workers can earn above minimum wage.
White said that the NAO is looking into what that correct ratio would be, varying based on the size and complexity of the nonprofit. He explained that the pay equity gap roots back to the archaic mindset that nonprofit workers should be willing to make a “wage donation” because they will be “paid in the afterlife” for serving the public good.
He added that the pay equity issue is a political concern that must not steer attention away from fundamental problems in the grant and contracting system, rather than a critique of nonprofit executive directors themselves.
“In reality, if you take whatever the salary is of an executive director, and you took that money and put it back into wages for your frontline staff, it’s still not enough money to actually meaningfully raise the wages of your staff,” White said.
Solutions to Address the Undervaluation
Kennedy-Wong said that the NAO’s counterparts expressed interest in replicating this research in their own states, after experiencing similar wage disparity issues. For example, New York’s #JustPay campaign advocates for better wages for human service workers. Prior to the report, these issues had already received state-wide attention, which moved Oregon to create the Modernizing Grant Funding and Contracting Task Force in 2023. The task force highlighted the value of nonprofits for communities and recommended the state government reduce reporting requirements and support workers’ living wages.
“We’re finding this very deep dichotomy between what’s being said by politicians and what’s being practiced in the line agencies of the jurisdictions that either contract or grant to nonprofits,” White told NPQ.
The [Nonprofit Organization of Oregon’s] counterparts expressed interest in replicating this research in their own states, after experiencing similar wage disparity issues.
The NAO and CCC’s researchers highlighted that reporting requirements should be reduced, as they are often burdensome for nonprofits and make government funding methods inaccessible to smaller organizations. They also added that reporting standards should be more flexible and focused on the type of organizations they are serving.
Researchers also urged increased communication and mutual accountability between government agencies and nonprofits by opening feedback channels about the funding system. For example, Mohsini described that a nonprofit leader the team interviewed suggested that government agencies could employ liaisons between contracting nonprofits and the agencies.
Nonprofits themselves could do more to address the undervaluation of their staff’s labor. For instance, the organizations could make job descriptions more reflective of the actual labor that often goes unrecognized and uncompensated; they could include more information about the true nature of the work, including the cultural service expectations and the potentially traumatic toll of the work. Acknowledging these underrecognized aspects of nonprofit work is not only fairer to employees but could help government agencies better understand what these services actually entail.
The report’s authors also emphasized that government agencies must do better to see themselves as partners of the nonprofits they rely on to perform services.
“Collaborations are what we need versus handing out gig-like work,” an executive director quoted in the report said. “Government entities should say they trust nonprofits to use the funds towards what’s best.”
