Negotiation and Executive Gender Pay Gaps in Nonprofit Organizations

Abstract

This study examines gender pay gaps among nonprofit executives and how compensation negotiability influences this disparity. Using tax return data from IRS Form 990 filings, we find that females earn 8.9 percent lower total compensation than men in our sample. Further, we observe that settings more conducive to negotiation manifest in larger pay disparities, whereas settings that limit executives’ opportunities to negotiate, or encourage females in particular to negotiate, produce smaller gender pay gaps. Our nonprofit setting constrains mechanisms such as labor force participation and risk preferences thought to explain the pay gap and our results are robust to using a Heckman correction model and matched samples. These findings provide evidence from a large-scale archival dataset of a plausible mechanism for the gender pay gap and point to a potential cost of work environments where negotiations play a larger role in setting compensation.

Keywords: Gender pay gap, Executive compensation, Nonprofit organization

JEL Classification: J16, J31, L30, M12