Professional Development Budget: How Much a Nonprofit Should Set Aside for Its Leaders
What is a professional development budget?
A professional development budget is the money a nonprofit sets aside each year so staff and leaders can keep learning. There is no nonprofit standard. Corporate benchmarks run from $874 to $1,254 per person a year. Set a per-person amount, give the executive director a separate line, and include coaching and paid learning time.
When money is tight, professional development is an easy line to cut, because no program stops the next morning. In our experience at CNPC, it is also the most accessible money for developing the executive director, because the line usually exists already. Outside money is scarce: between 1992 and 2011, foundations devoted less than 1% of their grant dollars to recruiting, keeping, paying, developing or retiring nonprofit staff, according to Talent Philanthropy research cited by Exponent Philanthropy. A professional development budget is money the board can approve without waiting on a funder.
Key Takeaways
- Size the professional development budget per person or as a share of payroll, then add a separate line for the executive director.
- Corporate averages run from $874 to $1,254 per person a year. Start from what you spent last year.
- Coaching fits inside the line: six sessions with a CNPC volunteer coach cost less than either corporate average.
- Set the number in October and win one board champion before the budget meeting.
How Does a Professional Development Budget Work?
A professional development budget is an annual operating line that pays for staff and leaders to build skills: courses, conferences, memberships, coaching and the hours spent learning. You can size it one of two ways, as a fixed amount per person or as a share of payroll, then add a separate leader line.
The per-person method is easier to explain. The payroll method keeps pace as you hire.
We could not find a nonprofit association that publishes a standard share of payroll, so the payroll method starts from your own history.
| Method | How to calculate it | Works best when |
|---|---|---|
| Per-person amount | A yearly amount per staff member, times headcount | Roles are similar and the board wants a simple figure |
| Share of payroll | Last year’s learning spend divided by last year’s payroll, applied to next year’s payroll | The staff is growing or salaries vary widely |
| Separate leader line | A fixed amount for the executive director, on top of either method | One coaching engagement or conference would use up a whole staff allowance |
If last year’s spending was near zero, use the per-person method with an amount you can protect when revenue dips.
How Much Should a Nonprofit Spend?
No nonprofit standard exists, so the useful benchmarks come from corporate surveys. The Association for Talent Development puts average direct learning spending at $1,254 per employee, and Training magazine puts its average at $874 per learner. A small nonprofit can use those figures as a reference and set an amount it can keep paying every year.
The Association for Talent Development reported $1,254 in its 2025 State of the Industry findings, plus 13.7 hours of formal learning per employee. Training magazine’s 2025 Training Industry Report found $874 per learner, up from $774 a year earlier, with an average of $1,091 per learner at smaller companies and $468 at large ones.
Training magazine surveyed only U.S. organizations with 100 or more employees, far larger than a nonprofit with eight staff. At the average of $874, eight staff cost just under $7,000 a year. Hypothetically, $400 a person for eight staff is $3,200. A separate leader budget of $1,000 covers six coaching sessions at any CNPC fee level, with at least $400 left for a course.
Budget the executive director separately. The executive director usually drafts the budget, so their own development is the easiest line to trim quietly. A board-approved line protects it.
What Should the Budget Include?
A complete professional development budget covers more than conferences. Include courses and certificates, conference registration and travel, professional memberships, coaching and mentoring, peer learning groups, books and subscriptions, and the paid hours people spend learning. Leaving out the time cost makes the line look cheaper than it is.
Tie each item to a goal in a leadership development plan, so the board sees what the money buys:
- Courses and certificates. Online and in-person, including your state association of nonprofits.
- Conferences. Registration, travel and lodging, plus cover for the work left behind.
- Memberships. Professional associations, which often discount their training for members.
- Coaching and mentoring. One-to-one development for the executive director and senior staff.
- Peer learning. Cohorts of leaders in similar roles.
- Learning time. The hours themselves, with 13.7 per employee as the corporate reference.
The Center for Creative Leadership’s 70-20-10 rule, drawn from its research on how executives learn, checks the mix: leaders learn 70% from challenging experiences and assignments, 20% from developmental relationships and 10% from coursework and training. Courses and conferences, often the costliest items, sit in the smallest share. Coaching sits in the 20%.
Where Does Coaching Fit in the Budget?
Coaching for the executive director fits inside the professional development line, usually in the leader line. Because CNPC’s volunteer coaches donate their time, six sessions cost $300, $400 or $600 depending on operating budget, less than either corporate average above, so even a modest line can cover one engagement.
The framing matters as much as the amount. A pattern we see at CNPC: when an executive director presents coaching as a personal benefit, the board treats it as discretionary. When the board sees it as protection for the organization’s continuity, it tends to treat the cost as part of its duty of care.
Boards cut perks and protect continuity. Present the executive director’s coaching as continuity, never as a perk.
Coaching has limits. Six sessions help a leader see patterns in delegation, board communication and priorities. They do not add staff or replace a strategic plan. Our breakdown of executive coaching cost compares CNPC’s fees with market rates.
If the line cannot stretch, capacity-building grants come next. Our guide to capacity building explains what they pay for.
When Should You Set the Budget?
Set the professional development budget in the fourth quarter, while next year’s operating budget is still open. CNPC’s own coaching applications are highest then: 27 in the fourth quarter of 2024 and 24 in the fourth quarter of 2025. We read that as leaders acting while budgets are decided. Run the numbers in October and present them in November.
If your fiscal year starts in July, run the same steps in the spring. Our guide to nonprofit budgeting sets out the full calendar.
How Do You Get the Board to Approve It?
Talk first with the board member most likely to support the line, and let that person carry it to the board. In our experience, a board champion persuades better than an executive director arguing for their own development. Bring three things: the cost, the cost of losing a leader and the changes to watch for.
- The cost. The total, with the leader line shown inside it.
- The cost of losing the executive director. A search, often an interim leader, and months of lost momentum. The executive coaching ROI calculator shows how to put a figure on it.
- The changes to watch for. Clearer reports, more meeting time on strategy, fewer decisions waiting on the executive director. Agree on them up front.
For cheaper options, our comparison of affordable coaching models sets out seven. This week, divide last year’s actual learning spend by your headcount and set the result next to the benchmarks above.
To put coaching in the line, executive coaching with CNPC is six sessions with a volunteer coach. Our coaches donate their time, which is why fees run 85%+ below market rate. We serve leaders of 501(c)(3) nonprofits, government agencies, and analogous non-U.S. entities. Start an application once the budget is set.
Frequently Asked Questions
What is a professional development stipend?
A fixed yearly amount each staff member can spend on their own learning, from an approved list or with a manager’s sign-off. Decide in advance whether unused money rolls over.
Is professional development taxable for employees?
Under IRS Publication 15-B, an employer can exclude up to $5,250 a year per employee under a written educational assistance program, and job-related training that counts as a working condition benefit can also be excluded. A cash allowance with no receipts is different, so ask your accountant first.
Can grants pay for professional development?
Some can, though foundations give little for staff development. Multiyear unrestricted grants from trust-based funders can cover it, because the nonprofit decides how to spend it. Our guide to grant funding for leadership development lists funders and proposal language.
What if the board says no?
Ask what would change the answer: a smaller amount, a later start or an outside funder. Keep the line at a lower figure instead of deleting it. An existing line is easier to raise next year than a new one.
Put Coaching in Next Year's Budget
Six confidential coaching sessions for nonprofit executive directors, from $300. Our volunteer coaches donate their time, which keeps fees 85%+ below market rate.
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