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Jul. 27 2010 - 11:29 am | 141 views | 0 recommendations | 0 comments

Why non-profit execs are not paid too much

Boys and Girls Clubs of America logo

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Anger over executive salaries is fast turning into a witch hunt. We’ve no longer just down on financiers, but also on state employees, on teachers, on just about everyone. It seems everyone — except ourselves, of course — is paid too much.

And the latest target is non-profit execs. According to a piece in the NYTimes, New Jersey and Vermont are both looking to limit salaries of execs at non-profits that have contracts with the state. New Hampshire is scrutinizing heads of non-profit hospitals. And of course Washington is getting into the act:

On Capitol Hill, four senators this spring refused to approve a $425 million package of federal grants for the Boys & Girls Clubs of America after staff members looked at the organization’s tax forms as part of a routine vetting process and were surprised to learn that the organization paid its chief executive almost $1 million in 2008 — $510,774 in salary and bonus and $477,817 in retirement and other benefits.

“A nearly $1 million salary and benefit package for a nonprofit executive is not only questionable on its face but also raises questions about how the organization manages its finances in other areas,” said Senator Tom Coburn, Republican of Oklahoma.

Allow me to disagree. In these days of hyper-inflationary salaries, a $1 million package is not that big at all. C’mon — Lloyd Blankfein’s $9 million bonus represented a huge cut! And these numbers are including contributions to retirement funds and bonuses (which most often really are linked to performance — programs offered, funds raised, etc.).

Many of these people really have proven to be stellar leaders, the types of folks who would easily command multi-million packages if they worked for the private sector. And in many cases, their work is almost identical to their private sector counterparts. Do you really believe that operating a non-profit hospital is a cushier job than operating a for-profit one? That curating an art museum is easier than running a private art collection? Or that opening new Boys & Girls Clubs is somehow less logistically grueling than opening the same number of Starbucks?

Kudos to Rick Goings, who sits on Boys & Girls board and loudly, uncategorically defends the nearly-million-dollar pay package that Roxanne Spillett, its leader, pulled down in 2008:

Mr. Goings noted that during Ms. Spillett’s 14-year tenure as chief executive, the number of clubs had risen to 4,000 from 800 and the combined revenue of the national office and the local clubs jumped to $1.4 billion from $438 million.

“They don’t seem to appreciate that the Boys & Girls Clubs today are a fairly sophisticated business run by fairly sophisticated business people,” said Mr. Goings, who is also chief executive of Tupperware Brands. “Do they really think we’d waste their money? Or anyone’s money?”

I’m as against excessive pay as anyone. But we still pay mega-millions to people whose sole contribution to society is pushing useless (and often toxic) pieces of paper around. So do I mind if we pay close to $1 million to people who are effectively running organizations that genuinely bring aid and comfort and health to human beings? Not at all.


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    I graduated from Cornell with a degree in child psychology, enough years ago so that all you needed to break into journalism was willingness to starve. I went into business journalism because, in the 60s, the business press was the crusading press, the ones that wrote about environment, race relations, etc. Since then I have worked for Business Week, Chemical Week and, from 1984 through May 2008, BizDay at the New York Times. I remain bored by and ignorant of esoteric financial instruments; I remain fascinated and pretty knowledgeable about management, marketing, environment, all the non-financial aspects of business. But my true passions? Tennis, both playing and watching, and food, both cooking and eating.

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