Nonprofit employee wages are on pace with government wages in Minnesota for the first time — indicating that a sector long staffed by people expected to live on little pay while doing good has grown increasingly competitive with other industries.

The average wage at Minnesota nonprofits, excluding much larger hospitals and higher education, was $52,765 compared with the average government sector salary of $52,724 in 2017, according to the most recent state data available.

"Over the last 10 years, there's been major progress," said Jon Pratt, executive director of the Minnesota Council of Nonprofits. "There's no economic reason it should be less [than government wages]."

Across Minnesota, the growing nonprofit sector is trying to compete for employees, especially as the state faces some of the lowest unemployment rates it's seen in decades. For instance, a job board at the Minnesota Council of Nonprofits has 2,000 positions, the most ever.

Whether the wage gap has continued to shrink won't be known until 2018 salary data is released in May. And some nonprofit workers say it's still an industry struggling to retain young employees who are lured to government or corporate jobs that have higher pay, better benefits and more career opportunities.

"There are people really driven to make Minnesota a better place but can't make it financially work," said Lindsay Bacher, who is on the board of the national Young Nonprofit Professionals Network.

That's why People Serving People in downtown Minneapolis, the region's largest family-focused homeless shelter, started paying about 80 full-time employees a minimum of $15 an hour in 2018 before the city passed an ordinance requiring it.

And this year, every employee is getting an average pay raise of 3% after years of stagnant wages.

"The labor market is extremely tight right now," said Daniel Gumnit, chief executive of People Serving People. "You simply can't attract people with low wages. … I also think it's immoral to expect an entire industry and all of these people to work with low wages."

Experts say fundraising for staff salaries and operations is more challenging than fundraising for a new building, and nonprofits often have to get creative to find the money to increase staff salaries. For instance, in St. Cloud, the Boys & Girls Clubs of Central Minnesota is launching a new endowment thanks to receiving its largest gift in its nearly half-century history, which in part will help pay for staff wages for its 250 full- and part-time staff. And at People Serving People, Gumnit said they're postponing building improvements, such as repaving a parking lot, and delaying filling open positions to ensure staff get a pay bump.

Meanwhile, according to the Minnesota Council of Nonprofits, pay for nonprofit CEOs rose 7% from 2016 to 2018, reaching a median salary of nearly $103,000. The rising CEO pay has sparked debate over whether it helps attract top talent or should be more modest at nonprofits.

Retention concerns

Across Minnesota, the nonprofit sector is booming, with the highest number of nonprofit employees in state history — 328,111 workers, or 12% of the state's total workforce.

When the wage analysis of the nonprofit sector includes much larger and higher-paying hospitals, universities and colleges, the sector's average annual wage of $56,759 actually slightly surpassed for-profit average wages in 2017.

But younger nonprofit staff often face much lower wages, said Bacher, who also works for the St. Paul-based Wilder Foundation.

In a survey last year by the Young Nonprofit Professionals Network and researchers at the University of Nebraska Omaha, nearly 60% of participants said they make less than $50,000 a year. Nearly 40% of young employees — those who are under 40 or have worked for nonprofits for 10 years or less — said they plan to leave their organization in the next three years.

The majority cited pay as a reason they'd leave. The other top reasons: the lack of opportunities for advancement and the job not fitting with other personal goals such as family.

Bacher said she knows nonprofit employees who work second jobs to make ends meet and some organizations that even have food shelves for some of their staff to use.

When Sarah VanDusseldorp first got a job at a human services nonprofit in her 20s, she was content with making less than $30,000 a year. But after six years, she said the low wages and little room for career advancement were two of the reasons she left her job as a grant writer.

"I can't pay my bills with a feeling I did something good in the world," said VanDusseldorp, now 32, of Minneapolis, who works for a catering company. "It just wasn't sustainable for me."

Michael Brink, 40, of Minneapolis, made the opposite career swap, starting out in telecommunications and sales before the recession hit and prompted layoffs in 2008. He went to graduate school for nonprofit management and now works as a consultant for nonprofits. But, he said, the low salaries and lack of opportunities in the sector are still frustrating.

"I could easily go out and make six figures now," he said of a salary at a corporation. "I think the sector needs to catch up with [for-profit companies'] salaries … or young people aren't even going to consider this sector."

Kelly Smith • 612-673-4141