Reforming pay structures in the social sector will benefit everyone

This article is authored by Mangesh Wange, CEO and Board Member, Swades Foundation.

For most young professionals, compensation is the primary filter when evaluating a job. When the pay is low, capable, driven talent rarely considers a career in non-governmental organisations (NGOs). Yet, society expects this sector to solve the world’s most complex challenges such as poverty, water scarcity, education gaps, health care and the climate change.

SDGs (REPRESENTATIVE PHOTO)

This tension spans the broader public service landscape. In India, public school teachers routinely manage classrooms of over 50 students while earning a fraction of what their corporate counterparts make, driving high absenteeism and learning deficits. On World Teachers’ Day, UNESCO projected a global shortage of 44 million primary and secondary teachers needed to meet the 2030 Sustainable Development Goals (SDGs), identifying uncompetitive salaries and poor working conditions as primary drivers of attrition.

This holds true for the development sector as well. A study by the Centre for Social Impact and Philanthropy (CSIP) at Ashoka University and the Indian School of Development Management (ISDM), covering over 10,000 social sector employees, found that total compensation in the Indian development sector is 58% lower than in the for-profit sector.

When salaries remain subpar, high-performing professionals migrate to Corporate Social Responsibility (CSR) roles, consulting firms, or corporate positions that pay market rates and non-profits are left in a perpetual cycle of recruitment and training, incurring high hiring costs and losing institutional memory while operational continuity suffers and community relationships weaken. Part of the issue lies in funding structures. A report by The Bridgespan Group highlights that Indian non-profits face chronic underfunding due to the under-reimbursement of indirect costs, with many donors allocating just 4% to 10% for overheads such as salaries, capacity-building, and systems. Donor restrictions force administrative budgets to a breaking point: Every rupee or dollar is expected to fund visible outputs like building classrooms or distributing field kits, while investments in workforce and infrastructure are squeezed. Funders expect detailed impact metrics, documentation, media visibility, and strict compliance, yet rarely provide the financial backing required to pay the talent performing this work. While transparency in the sector is routinely championed, we must be equally transparent about the fact that many NGOs cannot pay their staff what they deserve.

Solving this crisis requires a fundamental shift in how we view compensation.First, grantmakers and corporate CSR foundations must replace rigid overhead caps with flexible, unrestricted funding models that explicitly allocate 10% to 20% of project budgets toward talent, operational infrastructure, and staff well-being. Second, non-profit leadership and donors must collaboratively establish cross-sector compensation benchmarks that index NGO salaries to fair market rates. By funding the organisational backbone with the same rigor as field outputs, the social sector can build durable institutions capable of retaining the talent needed to solve our world's greatest challenges.Third, supporting non-profit manpower and capacity building through their L&D teams on pro bono basis. For sustainable solutions and impact, strengthening the delivery systems and organisations is the first step which we all should consider.

Until funding models adapt to cover true operational costs, the sector will continue to starve its most valuable asset--its people.

(The views expressed are personal)

This article is authored by Mangesh Wange, CEO and Board Member, Swades Foundation.