Methodology

Methodology and Background

Leadership

Here we evaluate the gender composition of three levels of employees. We can access this data as the IRS requires organizations to report on leadership only. Note: some organizations also disclose their non-binary employees.

• Although women constitute 73 percent of the U.S. nonprofit workforce, they predominantly occupy lower-level positions.
• According to an AAUW study, in organizations with budgets less than $1M, 56 percent of CEOs are women.
• This figure drops to 22 percent in larger organizations with budgets over $50 million.
• However, board/trustee representation is more balanced, averaging 48% women.

Pay

Equal Pay is a workplace issue that women care most about–according to research performed for Gender Fair by ABX, surveying 2,500 Americans. In addition to revealing gender pay gaps, our ratings show the ratio between average pay and top salary, which is significant as 20 percent of nonprofit employees struggle from paycheck to paycheck.

• The overall pay gap in the US is:
  • 83 cents for white women
  • 64 cents for black women
  • 49 cents for Bangladeshi women
• The National Council of Nonprofits reports: "Females on average earn around 24.8% less than males."
• The gap extends to top jobs:
  • Women CEOs at organizations with annual budgets of less than $1 million experience median pay gaps of between 6 percent and 13 percent relative to male CEOs.
• At larger nonprofits, the gap is larger: female CEOs face a median 18 percent pay gap at nonprofits with the largest budgets.

Diversity

The United States encompasses a diversity of cultures and ethnicities that are not typically represented in this sector. Nonprofit organizations are not required to report on workforce diversity as companies are, although a petition to the IRS is now circulating to change that. A small percentage of nonprofits voluntarily report this information to the Candid organization, and we rely on this reporting for our ratings.

• Approximately 75% of the nonprofit workforce is white.
• The Urban Institute reports that 16 percent of nonprofits focusing on serving people of color are governed by all-white boards.

Scoring Methodology

51 Points are based on Gender Diversity In Leadership:

• 17 points for Trustees
• 17 points for Officers
• 17 points for Highest Compensated employees
• Above 50% Female: Scores receive a perfect 17 for a category if the percentage exceeds 50%, reflecting higher gender diversity.
• Incremental Scoring: Points are assigned incrementally from the 50% mark. For example, if an organization scored 47%, it would be awarded a score of 13.

33 Points are rewarded based on Pay Equality:

• 17 points for the gender pay gap in leadership
• 8 points for the Average Salary: Evaluated by comparing the ratio of average employee salary to the overall average salary in the database.
• 8 points for the CEO Pay Ratio vs average employee salary of same organization
• These scores assess how the CEO's compensation compares to the average employee compensation. The lower the ratio, the better the you score.
• They also assess the disparity in compensation in leadership between genders. We analyzed the ratio of average pay of women compared to men in leadership. The lower your ratio, the higher your score.

16 Points for Overall Diversity:

• 8 points for Candid Reporting: Companies receive 8 points if they report their staff and diversity with Candid.
• 8 points for Diversity: Companies are awarded 8 points if they have a higher percentage of minorities than the national average.

Percentile Scoring

To evaluate each organization we divided the performance data into five distinct groups based on percentiles—these are essentially benchmarks that split the data into five equal parts. Depending on an organization's performance in a specific metric, such as gender diversity or pay equality, it falls into one of these groups. Each group corresponds to a different score, ranging from lowest to highest. So, an organization performing in the top percentile group would score the highest possible points for that metric, reflecting excellent performance, while a company in the bottom percentile group would receive the lowest score, indicating significant room for improvement. This method ensures that the scoring is both fair and reflective of how each organization's efforts compare to others in the same field.

After individual metrics are scored and scaled, they are summed to produce a final score for each organization. This aggregate score represents an overall evaluation of the organization's practices in gender diversity, compensation equity, and transparency. This requires a balanced approach across all key metrics to achieve a high score.

How Can Organizations Be More Fair?

• Participate in Gender and Racial diversity reporting.
• Appoint more women to positions of leadership.
• Hire employees from diverse backgrounds.
• Pay employees more equitably.
• Decrease disparities in pay among leadership and highly compensated positions.

SOURCES

Our team sourced gender and pay data from IRS 990 Schedule J forms. Data on diversity is derived from Candid’s database; nonprofits can opt in to share their demographics, yet only 10 percent of organizations choose to do so. If a nonprofit does not share demographic data with Candid, their score drops by 16 points.

Four computer science students aggregated and conglomerated 50 Gigabytes of data (equivalent to about 1.3 million pages of paper) and used artificial intelligence (GPT) to categorize the organizations. Gender identity was determined probabilistically using a gender name dictionary from Harvard, found here: Harvard Dataverse. The work can be found at rhit-duffdl/GenderFair.

Contributors:

• Babacar Diatta
• Dillon Duff
• Richie Eaddie
• Hayden Mattick

Acknowledgments:

Gender Fair would like to thank: the Faculty of Computer Science at Rose-Hulman Institute of Technology--notably, Dr. Gloria Liou; Dr. Jean Camp, Director of Center for Security and Privacy in Informatics, Computing, and Engineering; and Candid.