Quick answer
A strong 2027 nonprofit compensation plan should connect budget assumptions, current market data, job architecture, salary ranges, pay equity, executive compensation governance and manager communication. Use this checklist to sequence those decisions before annual pay actions are approved.
Planning note: Compensation budgets vary by organization, workforce and labor market. External salary-budget forecasts are context—not a universal nonprofit raise target.
2027 nonprofit compensation planning checklist
Nonprofit compensation planning works best when pay decisions are tied to mission, workforce needs, market evidence and governance rather than handled as a single annual percentage exercise. The checklist below gives HR teams, executives and compensation committees a practical sequence for 2027 planning.
1. Confirm your compensation philosophy and 2027 objectives
- Document how your organization intends to position pay relative to relevant labor markets.
- Clarify how mission, affordability, retention, internal equity and critical-skill needs influence decisions.
- Define which decisions require executive, finance, compensation committee or board approval.
2. Build budget scenarios instead of relying on one raise percentage
- Model merit, market, promotion and adjustment pools separately where practical.
- Estimate benefit and payroll-cost implications alongside base-pay changes.
- Test multiple scenarios against the approved operating budget.
Salary-budget surveys can provide useful context, but they represent different employer populations and should not be treated as a universal nonprofit standard.
3. Inventory roles and refresh job information
- Identify new, materially changed and difficult-to-fill roles.
- Update job descriptions before benchmarking roles whose responsibilities have changed.
- Review job families, levels and reporting relationships for obvious inconsistencies.
4. Select relevant nonprofit compensation data
Use data that matches the role, organizational scale, geography and labor market. Public Form 990 information can support executive-pay comparability work, but its reporting lag and limited job detail mean it should not automatically substitute for current salary-survey data.
For a deeper source-selection framework, review JER HR's Nonprofit Compensation Studies and Custom Salary Survey Consulting.
5. Review salary ranges, compression and outliers
- Compare current ranges with selected market references.
- Identify employees below range, above range or clustered near minimums and maximums.
- Check compression between employees and supervisors or between new hires and experienced staff.
- Separate structural range issues from individual pay decisions.
6. Run an internal-equity and pay-outlier review
Review similarly situated employees using relevant factors such as role, level, experience, performance and location. Escalate unexplained patterns for appropriate HR, compensation and legal review rather than assuming every difference has the same cause.
7. Set the executive compensation governance calendar
- Schedule the executive-pay review before compensation is approved.
- Confirm who has decision authority and how conflicts of interest are handled.
- Gather appropriate comparability data.
- Document the decision, participants, data considered and rationale contemporaneously.
See JER HR's Board Governance and Executive Compensation services for related governance guidance.
8. Review variable and incentive compensation where applicable
- Confirm eligibility and plan purpose.
- Check whether measures are understandable, controllable and aligned with organizational goals.
- Model potential payouts before final approval.
- Document governance and communication responsibilities.
9. Prepare compensation-reporting inputs
Coordinate early on information needed for Form 990 Part VII and, where applicable, Schedule J and related-organization reporting. Compensation reporting and intermediate-sanctions questions can be fact-specific, so qualified tax or legal advisers should review compliance conclusions.
10. Approve the plan and prepare managers
- Record final budget, range and governance approvals.
- Give managers clear guidance on how decisions were made and what they can communicate.
- Prepare consistent employee-facing explanations of salary ranges, market adjustments, merit decisions and effective dates.
2027 compensation planning calendar at a glance
| Timing | Primary focus | Decision or output |
|---|---|---|
| Q1 | Confirm philosophy, governance, job changes and current-year priorities | Approved objectives, ownership and data plan |
| Q2 | Review benchmark roles, market data, ranges, compression and outliers | Validated findings and issues requiring action |
| Q3 | Model salary budgets, market adjustments, promotions and executive-pay decisions | Budget scenarios and recommendations for approval |
| Q4 | Finalize decisions, prepare managers and document the next review cycle | Approved plan, communications and 2028 maintenance actions |
Quarterly 2027 checkpoints
Q1
Confirm implementation, resolve payroll or range issues, and document exceptions.
Q2
Review hiring pressure, turnover, hard-to-fill roles and emerging market gaps.
Q3
Refresh planning assumptions, job changes and preliminary market data for the next cycle.
Q4
Finalize benchmarking, budget scenarios, governance reviews and manager communication for the next annual cycle.
Questions to ask before approving the 2027 plan
- Are our market comparisons relevant to the jobs and organization?
- Do salary ranges still reflect the structure we intend to use?
- Have we separated market, merit, promotion and equity adjustments?
- Are executive compensation decisions independently reviewed and documented?
- Can managers explain the compensation process consistently?
- Have we documented assumptions so they can be revisited later?
Frequently asked questions
What should a nonprofit include in a compensation plan?
A practical plan normally covers compensation philosophy, market data, job structure, salary ranges, budget pools, internal-equity review, executive-pay governance, approval responsibilities and communication.
What is the right nonprofit salary increase for 2027?
There is no single percentage that fits every nonprofit. Organizations should use current survey context together with affordability, market position, workforce needs and internal equity rather than treating one forecast as a required increase.
How often should nonprofits benchmark compensation?
Many organizations review market movement annually and conduct deeper role or structure reviews when jobs, labor markets or organizational needs change materially.
Can Form 990 data be used for nonprofit compensation planning?
Yes, particularly as one source for executive-pay comparability, but it has limitations including reporting lag and role comparability. It is generally stronger when supplemented with appropriate current market data.
Who should approve nonprofit executive compensation?
Governance depends on the organization's structure and applicable requirements. Independent, conflict-free review using appropriate comparability data and contemporaneous documentation is an important governance practice. For applicable tax-exempt organizations, review the IRS rebuttable-presumption guidance with qualified legal or tax advisers.
Need support with your 2027 nonprofit compensation plan?
JER HR Group helps nonprofits evaluate compensation data, pay structures and governance processes. Explore our nonprofit compensation consulting capabilities or contact JER HR Group to discuss your planning needs.
