Geography or Mission? Neither — Budget Size Moves Nonprofit Executive Pay Most, and It Is Not Close

Every compensation committee eventually has the same two arguments: whether the executive deserves a cost-of-living premium for the city, and whether the mission field pays differently. Both arguments are real. Both are about the small dials. Across three-quarters of a million officer filings, the dial that dominates is the one committees debate least: how big the organization is.

The finding

Start with the role alone — the job title — which explains 20.0% of the variation in log total compensation across the corpus. Then add one dimension at a time and watch what each buys:

Because the three dimensions overlap (hospitals are big; big organizations cluster in some states), each factor's contribution depends on when it is added. Bounding each honestly — credited first versus credited last — the ranges do not overlap:

However the ordering is sliced, budget size explains roughly four to six times what either geography or mission does — and it does so with the fewest categories. Ten budget bands beat fifty-seven states by an order of magnitude per category, which is the opposite of what a mechanical more-bins-explain-more artifact would produce. The size effect is structure, not arithmetic.

Why committees get this backwards

Geography is visible and emotionally salient — everyone knows rent in the city — while “we are now a $12M organization, not a $4M one” arrives gradually and shows up in no one’s commute. The filings say the salient argument is the small one: moving an organization across state lines changes expected officer pay far less than the growth it experienced over the same period. A board matching comparables should match budget band first, then sector, then location — and should treat any peer set matched on location alone as decorative.

The committee-room version of this finding

Committee practice tends to weight the visible dial. Cost-of-living arguments arrive attached to rents and relocation offers; the organization’s own growth arrives silently, a budget line at a time, and rarely triggers a pay conversation at all. The structural tension shows up when the hiring market and the size-matched data disagree — a candidate arriving from a larger organization, anchored to larger-organization pay. Nothing in §4958 forbids a board from paying toward the market it is actually hiring in; what the presumption’s documentation prong requires is that a deviation from the size-matched cohort be a recorded decision with a stated reason, not an unexamined concession (Treas. Reg. §53.4958-6). The filings’ message is one of proportion: a board that adjusts a benchmark by double digits for geography while leaving budget scale unexamined has the dials reversed.

Method and scope

Scope of every figure on this page: 732,319 Form 990 filings, tax years 2021–2025 (2023 is the last complete filing year; 2024 and 2025 are still filling), covering the 107 curated officer roles CauseComp publishes, filings with a known NTEE sector only. No cohort statistic below 20 filings is reported anywhere.

1. (a) R² figures are descriptive shares of variance from categorical group means on log reported total compensation — observational structure, not causal effects of moving or re-missioning an organization.
2. (b) Budget band is the organization's reported revenue banded into the ten bands CauseComp uses product-wide; band boundaries are part of what is being measured.
3. (c) Factors overlap; the first-added/last-added bounds are reported precisely so no single ordering is mistaken for the truth.
4. (d) Metro areas are absent by design — see the FAQ; the corpus geography is the filing state.

Frequently asked questions