non profit executive director salary
Sat, 04 Sep 2010 12:37:33 -0400
By Katy Snyder
How much is an executive director’s time worth? That’s the question wrought by a law recently passed in New Jersey that caps the amount that nonprofit executive directors whose nonprofits provide social services under state contracts can make. The cap will limit executive salaries at nonprofits to $105,750–$141,000, depending on the budget of the organization.
Highlighted in a New York Times article about the salary caps is the Boys & Girls Club of America (BGCA), which pays its executive director, Roxanne Spillett, close to $1 million in salary and benefits ($510,774 in salary and $477,817 in retirement and other benefits) Spillett’s salary came to light when senators reviewed the organization’s financials while preparing to sign off on a $425 million package of federal grants for the group. Four Republican senators refused to sign off on the grants, asking the BGCA for more details on its spending, according to a Chronicle of Philanthropy article.
Executive compensation was not the only question raised by the senators—the use of past funding, which had been earmarked to start additional Boys and Girls Clubs in underserved areas, travel expenses (which were over $4.4 million for the 2008 tax year) and lobbying expenses for the organization—were all called into question.
While the BCGA supplied responses to all questions raised (which you can read by clicking here) the question of how much a nonprofit executive should be paid is one that is not easy to answer. In response to questions about its executive director’s salary, BGCA said that it “follows guidelines adopted by the IRS to assist nonprofit organizations in this area, including the use of an independent third party to assess the marketplace and determine comparable salary practices, ‘peer comparison’ compensation and benefits and other related trends in the nonprofit sector.”
While some, including BGCA’s board chair, defend Spillett’s high salary (quoted in the Times, BGCA Board Chair Rick Goings said that Spillett’s salary was in line with the massive growth that the organization has undergone in her 14 years as executive director). Reaction to Spillett’s salary has been mixed in the nonprofit world. Rosetta Thurman, a nonprofit consultant and blogger for The Chronicle of Philanthropy calls Spillett’s salary into question, pointing out that executive directors should receive good salaries without them being “excessive.” She also points out that the nonprofit world is not the for-profit world and that million dollar salaries are just not sustainable, could detract donors from making donations, and that instead of heavily compensating just the ED, nonprofits should ensure that all staffers are well-compensated.
Others argue that nonprofit salaries for top organizations with large budgets can and should mirror those of the private sector. In a recent Nonprofit Street Blog, I quoted nonpropfit guru Nancy Lublin, who was defending the high salary paid to some EDs. Lublin said, “Salaries are always a weird topic in our sector. We’re all supposed to be martyrs and we’re supposed to guffaw at huge salaries like Laura Walker’s at WNYC [a public radio station in New York]. But Laura is worth it.” (Walker makes about $500,000 a year, and manages a multi-multi-million dollar budget.) Lublin is not alone in this sentiment. A Forbes article on the topic of nonprofit compensation says that like in the business world, nonprofit leaders must oversee large budgets, but also have to have a commitment to the mission of the organization. Like for-profit businesses, nonprofits can only attract the best EDs with competitive packages, the article argues.
As the Forbes article points out, salaries like those of the BGCA ED are far from the norm. Most nonprofit directors toil away for far less than the average business exec with the same level of responsibility and experience. In my opinion, nonprofit leaders who show results and manage multimillion dollar budgets are worth the big salaries, and their compensation can serve as a reminder to all of the important work that they do. Could more be done to raise the salaries of less high-profile EDs and of worker-bee nonprofit staff? Absolutely.
So what do you think? Do nonprofit leaders deserve compensation that is on par with the for-profit world? Or does the work of nonprofits mandate that their leaders receive more modest salaries? Let us know by leaving a comment.
August 22, 2010; Source: Montgomery Advertiser | Nearly every week we see a couple of articles taking stock of the pay for nonprofit executives, like this one from the Alabama’s Montgomery Advertiser about Alabama nonprofits, or this piece from Crain’s Detroit Business on Motor City charities. There is also this review of national compensation data from Charity Navigator published in Portfolio.
Crain’s defends its biennial salary survey as a public service, much like its publication of private sector salaries, and takes pains to explain that six-figure salaries for nonprofit CEO’s are understandable because of the complex operations these execs oversee, notwithstanding public shock that they make salaries at that level.
The Charity Navigator survey examined some 3,000 charities, finding salaries rose 4.7 percent as revealed in their 2008 990’s, with education nonprofits paying the highest average CEO salaries ($272,545 with an average raise of 5.9 percent). CEO salaries at religious nonprofits were the lowest ($90,000), salaries at nonprofits with $500 million or more averaged $695,379. In Detroit, where the economy is wreaking havoc, Crain’s found a trend toward incentive pay (extra compensation tied to meeting performance benchmarks), but a reduction in perks such as health club memberships.
Alabama nonprofits usually don’t get much attention in the national nonprofit press, but the Montgomery Advertiser review of salaries at 55 local nonprofits revealed much the same as Detroit’s—that executive salaries are being increasingly linked to performance measures, though as reported by the paper, mostly in terms of money raised.
One intriguingly candid response reported in the Alabama survey came from a group called Alabama Arise, which put the CEO’s salary at a tiny $9,576. The executive director weighed in to say that number was too low in two ways, on its own accord and in combination with another job: He made $11,232 for Alabama Arise and $56,160 for the Arise Citizens Policy Project, for a more reasonable compensation package of over $67,000 (Alabama Arise is really two organizations, apparently one a (c)(3), the other a (c)(4), working as a coalition of 150 faith-based congregations and community organizations addressing policy issues facing low-income Alabamians).
Would that many of the high paid foundation, university, and hospital CEOs who make multiple incomes due to positions with other nonprofit (and sometimes for-profit) organizations be that candid about their total compensation?— This e-mail address is being protected from spambots. You need JavaScript enabled to view it
