Charity Fat CatsThe CEO of my favorite nonprofit earns more than $200,000. Is that outrageous?
Posted Wednesday, June 17, 2009, at 10:30 AM ETDo you have a real-life do-gooding dilemma? Please send it to and Patty and Sandy will try to answer it.
PRINT
DISCUSS
E-MAIL
RSS
RECOMMEND...
Facebook
MySpace
Mixx
Digg
Reddit
del.icio.us
Furl
Ma.gnolia
Sphere
StumbleUponDear Patty and Sandy,
For a few years I've been donating to two charities, Heifer (an organization that fights hunger and poverty by providing needy families with livestock) and ACCION International (a microfinance organization committed to poverty alleviation). I believe in their missions and checked them out on Charity Navigator before making my first donations.
I was getting ready to make another annual donation recently and decided to check up on them again at Charity Navigator. I happened to see the CEO's salary for Heifer was in the $200,000 range, and I have to admit I was offended. So, as a comparison, I reviewed the CEO's salary at ACCION International and found that it was also around $200,000.
Am I somehow naive and unworldly for viewing these salaries as objectionable?
—Lester
Patty:
Are you unworldly? Absolutely not. These are two extraordinary organizations doing great work and advancing ambitious goals in very difficult settings, yet you continue to poke around and look for more information on them to ensure your funds are well-spent. I admire that; more people should be so wise about their giving!
Are you naive about pay levels? Possibly. Everything has a market price, and nonprofit CEOs are no different. From what I know of the nonprofit sector, these two executives appear to be in a very reasonable pay range. The size and complexity of their organizations and breadth of the CEO's responsibilities (including fundraising and public duties) require their boards to search for the best candidate in the market. There are hundreds of nonprofit CEO jobs open every year, and these organizations want to attract and retain a great leader. The cost of unexpected turnover at the top can be very high—not only in lost productivity but in lost fundraising and, most important, in lost impact. The best nonprofit executives I worked with had all the skills to make three times as much in the private sector, but they enjoyed the "psychic income" of being in jobs they were passionate about. For the right CEOs of these two great organizations, a $200,000-plus salary seems reasonable to me.
Sandy:
If our inbox is any indication, this is a perpetual concern for donors: Why am I donating my hard-earned cash to an organization whose CEO is raking it in? I don't think your objection makes you naive and unworldly, but I do think you should look at these salaries in context.
The 2008 Charity Navigator CEO Compensation Survey found that the average executive salary among the charities it evaluates is $149,972. The CEO of Heifer has a listed salary of $236,881; the CEO of ACCION International, $210,000. While those are above average, both organizations are particularly large charities with significant assets. As a percentage of overall expenses, the CEO salaries are actually very low. (Of all nonprofits evaluated, the average CEO's salary made up 3.32 percent of expenses; Heifer's made up 0.25 percent and ACCION's 1.58 percent.) To really put the salaries in context, imagine what these CEOs could make leading similarly sized organizations in the for-profit sector. The average compensation of a CEO at one of the S&P 250 companies is $11 million!
Like you, I want my donations to go to well-run, mission-driven, efficient organizations (such as ACCION International or Heifer). But I also realize that in order to get and retain talented staff and leadership, you need to offer competitive salaries. Looking around at my friends and colleagues in the nonprofit world, I worry that many of them will leave for better-paying careers elsewhere. And my fears aren't unfounded: A 2008 Meyer Foundation survey found that 69 percent of emerging nonprofit leaders feel underpaid for the work they currently do; and 64 percent have financial concerns about committing to the nonprofit sector in the long run.
By setting salaries below market value, we not only risk losing talented leaders—but we also risk losing diversity. If nonprofit jobs don't pay enough to allow people to pay off their student debt, purchase a home, send their kids to college, and save for retirement—then all the "psychic income" in the world isn't going to help.
Do you have a real-life do-gooding dilemma? Please send it to and Patty and Sandy will try to answer it.
Hitchens: The "War on Terrorism" Didn't Cause the Fort Hood Shootings
Enter Slate's Write-Like-Sarah Palin Contest
Whoa! The House Health Care Bill Is Actually Less Expensive Than the Senate's.
Like Israel but Colder: The Jewish Autonomous Region of Russia
Why Everyone Should Read When Everything Changed
Spitzer: How Tim Geithner Was Fleeced by Wall Street
I think a better measure of how appropriate executive compensation is at a non-profit is to see the disparity between an entry-level full-time position and what the President/CEO is pulling in. I work for a large national non-profit, and our president takes home about $450K a year in salary--and that doesn't include the cost of his benefits, contributions to retirement, etc. He makes more than 10 times what I do at my mid-level position, which is actually a decent ratio for an organization with a $60 million annual operating budget.
I don't begrudge the non-profit CEO's their paychecks, but do chafe at the idea that you can only get good, committed non-profit executives by trying to compete with private sector executive salaries. Because that has never been the case for non-executive positions. I am paid far less than what I could make elsewhere in the private sector, but like working for a "cause," so I stay. We're conditioned to feel guilty about asking for raises because donors want their money to go to program costs, not administration. And the senior management continually tells us that overhead has to stay low, so forget about cost of living increases.
What really bugs me is that the difference between a $200K and $400K a year lifestyle is so small compared to the difference between a $35K and $45K a year lifestyle. Boosting salaries near the bottom of the food chain at non-profits would have a negligible effect on the comfort of those at the top of the food chain. Those near the bottom can't go into interviews demanding a comparable private sector salary, so why do boards continually accept that behavior from potential executives?
-- dukebdc
(To reply, click here)
Supply and demand is a pretty bogus argument, when supply is artificially restricted for top executive posts to those who already have them, and recruitment activities are conducted on a national scale only among this restricted set.
Why can't non-profits promote from within? And pay those elevated to the CEO spot the typical 10% maximum increase on the salary they already earn?
In apeing the CEO recruitment and compensation habits of for-profit organizations, non-profits do their donors a disservice. It becomes a self-perpetuating class of the national in-crowd justifying their excessive compensation for jobs whose principal satisfaction should be in opting out of the unjust pay differentials of private industry to perform a public service - which should be sufficient reward in itself.
OTOH, a $250,000 salary for a big international non-profit doesn't seem that excessive - even Obama doesn't consider such a salary high enough to increase taxes on it.
$400k, though, is pushing it. And anything that lands the CEO among the top 1% of salaries is definitely too much.
-- utopus
(To reply, click here)
I work at a nonprofit as a fundraising coordinator - I may be able to offer just a tiny bit of insight on this topic. First - thanks to the writer for donating - anywhere. Second- 200k just is not that much money for the job. Believe me, please, 200k is a tiny sum to the high net worth donors that they need to cultivate. The job means long hours, hang ups, frustrations, budget issues - it is not always fun and warm and fuzzy. I'm in Pittsburgh, and even with our low cost of living, 200K is not a fabulous extravagant salary. Sorry.
The CEOs and Exec Directors of nonprofs that I know - they all serve on boards of other nonprofs, and the donations they make, and the funds they help raise - are usually significant.
Just because we work in NON PROFIT does not mean that we do not deserve to be compensated fairly for our work. The Heifer guy - he helps a lot of people right? Should he help people AND not take a salary?
-- thirstygirl999
(To reply, click here)
Put it this way -- the CEO of your organization is putting in 12 hours a day plus, trying to make sure that the things they are doing work well. They've got skills which are incredibly valuable, but they're donating the equivalent of hundreds of thousands of dollars a year in an "in-kind" donation. The least we can do as supporters of the same cause is recognize and celebrate that donation, giving them the opportunity to enjoy the comfortable life they would almost certainly be able to enjoy outside the organization.
Those jobs really are very challenging, and most of us couldn't do them. And if they're reasonably comfortable, they'll make better decisions anyway. Burnout is brutal.
-- Kimmitt
(To reply, click here)