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Are You Operating a Tight Ship?

by Jennifer Gray

Recent news reports have highlighted what appears to be questionable decision-making by past employees at a Maine nonprofit. These stories are challenging for us at MANP because we know that this is a rare example, yet it provides fuel for pervasive misconceptions about the sector as a whole. News like this should remind everyone that it’s never a bad time to make sure your ship is tight. Running into foul weather can divert you from focusing on your mission.

As it has throughout its 23 year history of serving Maine’s nonprofit sector, MANP remains committed to promoting and supporting the highest standards of professional and ethical conduct among nonprofits through the many programs, resources and services it offers the sector.

USS Zumwalt (US Navy, Built by Bath Iron Works, Bath, Maine)

Resources Are Available

Situations like these are very rare and are not segregated to the nonprofit sector, but do serve as a call to action to both nonprofits and donors to take advantage of the many resources available that support ethical practices and transparency. Consider this incident a good reminder that nonprofit boards play a very important oversight role and that every organization can find areas upon which to improve. Also, with regular board and staff turnover, regular training is essential for all.

An Anomaly

The overwhelming majority of Maine nonprofits are well-managed. Nonprofit organizations fully recognize that operating in an ethical and accountable manner is essential to building public confidence and support for their missions, and that the sustainability of the nonprofit sector and its continuing impact on Maine’s quality of life is inextricably linked to the public’s trust.

Excessive Compensation

Most of our nonprofits are actually quite small: 75% of all nonprofits in Maine operate with an annual budget of under $100,000. That is why it is very unusual for nonprofit leaders to make unreasonably high salaries. Further, the Internal Revenue Service (IRS) has laws in place to ensure that nonprofit compensation is reasonable. If people suspect that someone is unreasonably compensated, they can first file a complaint with the nonprofit’s board, and then with the IRS.

Wage Report

MANP conducts a biennial wage report where people can see what the actual average salaries are for Maine nonprofit executives. For the most part, compensation of nonprofit executives lags far behind the compensation of leaders in business and government. The real challenge for the majority of boards is not how to reign in excessive compensation, but rather how to find the resources to pay appropriate salaries.

To evaluate the appropriateness of executive compensation, consider the following:

  • the size and complexity of the nonprofit;
  • the mission area, geographic location, and financial condition of the organization;
  • the qualifications required for the job; and
  • compensation at comparable organizations.

Sub-minimum Wage

While not illegal, the sector as a whole has moved away from this practice as nonprofits routinely review their mission and practices to ensure that they’re in alignment.

 

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