Can a Founder of a Nonprofit Make a Salary?
When I meet with folks who are planning to start a nonprofit, there are a couple of questions I almost always get.
And, unsurprisingly, this is one of them. “If I become a nonprofit founder, can I make a salary while I help people?”
Nonprofit Founders: Making a Salary
I mean, I’m SO happy that you are willing to put the time and effort into starting some type of nonprofit organization or nonprofit foundation that’ll help other people. But you still have a family and life to support, right?
I get it. This is a real, practical concern that most every founder has. Sadly, the answer to your question isn’t all that clear cut. This is where I get to give the classic lawyer answer:
There are a lot of factors at play when deciding whether a founder of a nonprofit makes a salary. It depends on the kind of nonprofit you’re starting, what role in the new organization will be, how things go once you get moving…yeah. So, not a super satisfying answer, I know.
Here are a couple of ways I’ve seen this go down with my nonprofit startup clients:
- The nonprofit founder sits on the board and is NOT paid for the time they put into the organization. Nonprofit board members need to be volunteers (getting paid can get you into some real legal trouble). So, lots of founders in this position work part- or full-time elsewhere and help run the nonprofit in their spare time.
- The founder is hired by the nonprofit as the executive director (or in a similar leadership role). This way, the founder is paid, but they do give up all their authority to the board of directors, which governs the nonprofit and has hiring/firing authority of the founder’s position
Related: The Curse of Employee Turnover [PODCAST]
Making Your Decision as a Nonprofit Founder
As you can see, there are some serious pros and cons to consider if you’re a nonprofit founder making this decision.
This isn’t like a for-profit company, where the founder can retain full control of the nonprofit and make money. The control of the nonprofit belongs to the board of directors, and by choosing a paid position you are giving up a seat on the board.
So, let’s say you decide you decide you’re okay with serving as an Executive Director or some other staff position. Here comes the next big question. When can the new nonprofit actually pay someone?
First, there must be money to pay with. Duh, right? But it has to be said!
Second, paying the founder (or anyone) must be the right thing to do with the money.
Basically, paying you as the founder must be in the best interest of the mission. The first chunk of money coming into the nonprofit probably isn’t going toward anyone’s salary. It’ll go toward the things you need to do, to fulfill the mission. If you’re a soup kitchen, that money will need to go toward food or supplies before it can reasonably go toward anyone’s salary. It just makes sense.
Related: Nonprofit Mission Statement: The Mission Is Your North Star [PODCAST]
The TL-DR Version on Nonprofit Founders and Salary
Some nonprofits can be run mostly or entirely by a volunteer board. Others need to contract out or hire people to fulfill their mission. It really depends on how the nonprofit runs, how much money is coming in, and many other factors.
This isn’t a question that Google (or a blog article on my website or any other website) can answer for you.
It’s crucial to get the help you need with these questions when the time comes. Getting help from someone who knows nonprofits is SO worth it when these kinds of questions come up. Check out my Nonprofit Strategy Session to see how I can help you set your new nonprofit organization up for success.