How can you negotiate equity in a nonprofit?

1 Understand the types of equity

The first step to negotiate equity in a nonprofit is to understand the different types of equity that exist and how they work. Unlike for-profit companies, nonprofits cannot issue stock or stock options to their employees, as they do not have shareholders or profits. However, some nonprofits may offer other forms of equity, such as phantom stock, restricted stock units, or profit-sharing plans. These are synthetic or contractual arrangements that mimic the benefits of owning stock, such as receiving dividends, appreciation, or payouts based on the performance of the organization. However, they do not confer any voting or governance rights, and they may have different tax treatment and vesting schedules than stock options.

2 Research the nonprofit's equity policy

The second step to negotiate equity in a nonprofit is to research the nonprofit's equity policy and practices. Not all nonprofits offer equity to their employees, and some may have restrictions or limitations on who can receive it and how much. For example, some nonprofits may only offer equity to senior executives or key personnel, while others may have a cap on the total amount of equity they can distribute. You can find out more about the nonprofit's equity policy by reviewing its financial statements, bylaws, or tax filings, or by asking the hiring manager or a trusted contact within the organization.

3 Assess your value and expectations

The third step to negotiate equity in a nonprofit is to assess your value and expectations. How much equity do you want and why? How does it fit into your overall compensation package and career goals? How does it compare to the market rate and the nonprofit's budget and resources? You should have a clear idea of your worth and your desired outcome before entering the negotiation process. You should also be prepared to justify your request with evidence of your skills, experience, and impact on the organization's mission and vision.

4 Negotiate with confidence and respect

The fourth step to negotiate equity in a nonprofit is to negotiate with confidence and respect. You should approach the negotiation as a collaborative and constructive conversation, not as a confrontation or a demand. You should express your interest and enthusiasm for the organization and its cause, and acknowledge the value and challenges of working in a nonprofit sector. You should also be respectful of the nonprofit's constraints and limitations, and be flexible and creative in finding solutions that benefit both parties. For example, you could suggest alternative forms of equity, such as deferred compensation, performance bonuses, or retirement plans, if the nonprofit cannot offer you the equity you want.

5 Review the offer and consult a professional

The fifth step to negotiate equity in a nonprofit is to review the offer and consult a professional. Before accepting or rejecting an offer, you should carefully read and understand the terms and conditions of the equity agreement, such as the amount, type, vesting, valuation, taxation, and exit clauses. You should also consult a professional, such as a lawyer, an accountant, or a financial advisor, who can help you evaluate the risks and rewards of the equity deal and advise you on the best course of action. You should also consider the ethical and social implications of receiving equity in a nonprofit, and how it aligns with your personal and professional values.

6 Communicate your decision and maintain good relations

The sixth and final step to negotiate equity in a nonprofit is to communicate your decision and maintain good relations. Whether you accept or decline an offer, you should do so in a timely, courteous, and professional manner. You should thank the nonprofit for the opportunity and express your appreciation for their consideration and generosity. You should also explain your reasons for your decision and reiterate your commitment and enthusiasm for the organization and its cause. You should aim to preserve and strengthen your relationship with the nonprofit, as you may work with them in the future or collaborate with them in other ways.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?