The social sector has traditionally given feverish attention to executive compensation, often with narratives of martyrdom when it’s viewed as chronically low or “gotcha” when it’s viewed as unethically high. But these discussions typically ignore and even distract from more fundamental assumptions that undergird compensation philosophies.

Today more nonprofits, especially those dedicated to racial and economic justice, are confronting how their current approaches to pay and compensation position them inside the very capitalist systems they so often challenge. They are asking: “Is how we pay our own workers in alignment with our proclaimed values and external-facing work?” For many, the short answer is “no.”

As we bring greater focus to common nonprofit compensation systems, we can no longer ignore how nonprofits often perpetuate inequities among their staff that they seek to eliminate in the world.

Yet nonprofits differ from for-profit businesses or governments; they have different purposes, different revenue sources, and embody different cultural values. A nonprofit’s purpose, broadly speaking, is to benefit the public. It likely has a mixed revenue model that might include private donations, grants, and earned revenue. Similarly, its dominant work culture is likely collaborative, although some functions may be more competitive (fundraising), creative (programming), and controlling (finance and operations). It stands to reason that nonprofits are not simply trying to minimize their costs and maximize their output.

Nevertheless, nonprofits still operate within neoliberal capitalism, entrenched into the country’s legal fiber for over a half-century. As employers, nonprofits—or the nonprofit industrial complex as it’s been dubbed—account for more than 12 million jobs in the United States. This includes social justice organizations. Unfortunately, nonprofits have not been able to protect their employees from rising living costs, deepening inequality, or exacerbating racial and gender wealth gaps, even when reducing the income gap has been shown to dramatically reduce the racial wealth gap. Just as the broken social contract was exposed during the COVID-19 pandemic and racial justice uprisings, inequities in employment contracts have also been laid bare.

Read the full article about restorative compensation by Richael Faithful and Mala Nagarajan at Nonprofit Quarterly .