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Nonprofit Compensation in the News

by Brenda Peluso

The Chronicle of Philanthropy just released its recent survey of 325 organizations that are among those that raised the most money from private sources in 2008 as well as grant makers that held the most in assets that year –  in otherwords, large national nonprofit corporations.  This survey has been covered by USA Today and National Public Radio.

Nonprofit salaries are constant fodder for debate and we as a sector struggle with what is appropriate. What is your theory of nonprofit compensation?

  • Market theory – nonprofits are in a competition for talent, like other employers, and must negotiate on that basis.
  • Budget self discipline and voluntary restraint – deliberately moderate compensation in spite of what may occur with other types of employers.
  • Psychic income as essential ingredient – you’re not in it for the money, only part of your compensation is in cash; you receive the rest in your heart — or will in the next world (you’re doing the Lord’s work, after all), etc. etc.

How does your nonprofit set compensation levels?  How would you prefer the organizations to which you donate set compensation levels?

One thought on “Nonprofit Compensation in the News

Bill Ewing says:

Theory? All of the above. My organization? Not relevant.

This “fodder” should be called the Aramony Syndrome http://www.nptimes.com/Mar02/npt2.html. Extrapolating from one egregious situation and painting all (nonprofits) with a broad brush is a media tactic used when they are in-between a Madoff and a Lehman Brothers.

Quality will demand a price. Sure there are the Kit St. Johns who will put a belief system (not sure it’s “the Lord”) before personal gain. But he’s like many small business entrepreneurs willing to sacrifice now with the vision of a better future (for disadvantaged people or “the kids”). However, for growing nonprofits, when the start-up ED leaves and the need for structure (nee written evaluations) is reinforced by the threat of the labor board, formal expertise may trump passion. Boards will see risk and demand skills that get pricier with each senior management turnover. The volunteer part-time IT person morphs into a skilled, certified full-time pro with commensurate salary demands. Sure, the mission counts and some may work for less but not a lot less. “You get what you pay for” becomes the Governance committee’s mantra.

Interestingly of the top “Highest paid nonprofit professionals” (ranked by Mainebiz 2008) guess how many human service folks made the list…..that’s too easy….how many non-medical/university types….answer- 3, all foundation heads. Taking out the top 4 (all Jackson Labs people) the list goes from $350-140,000. No Maine nonprofit leader makes more than $140,000 except heads of medical, university & 3 foundations? The top 25 corporate (Mainebiz terminology) leaders all make more than almost any of the nonprofit execs. What does this mean? I’m not sure. But we nonprofits better kick our hairshirt mentality if we want to get by TABOR II. It’s then going to be survival of the fittest. Low income Mainers with 5 year or older cars are going to pay more taxes, get fewer services and, as a group, see their tiny piece of the American pie cut in half to pay AIG bonuses.

Sorry, this turned into a mini rant and I probably lost track of any point I was trying to make…..what was the question?

PS- I don’t give a rat’s behind about compensation at any organization that I give to…..they just have to ring my bell.

PPS- Aramony’s comp wasn’t all that bad; $400,000 to run a large national organization. If the Concorde trips and young women hadn’t surfaced we may have been spared that stain.

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