Nonprofit Salaries Redux

Our good friends at The Chronicle of Philanthropy have published their annual compendium of salaries of executives in the public benefit/nonprofit world. And once again the headlines, many of the charts, and much of the text focuses on how high some of them are. Indeed, there is even an analysis of the largely misguided attempt to legally limit nonprofit salaries – or at least to put a functional cap on them.

I continue to feel, though, that this conversation manages, again, to miss the mark. While I do think that it is always appropriate for public organizations [and public companies, for that matter] to be subject to transparency, and to limit abuses, I am not convinced that the greatest abuse is at the top.

It is not that I don’t care about the million dollar salaries, but I am not sure that I know whether a particular executive is worth it. True, sometimes, when I take a look at a 990, it appears evident that a ceo is receiving an inordinate amount of the overall budget. I particularly shudder when I see the salary of some whose organizations have clearly violated ethical and legal standards I hold dear.

But at the end of the day, I continue to believe it is the wrong question – or more accurately, the wrong question without a larger context. What, then, are some of the right questions:

One should want to know:

  • What are median salaries?
  • Are the lowest paid employees receiving a living wage, with benefits?
  • What is the typical turnover and tenure rate of staff?
  • Is the board paying attention to the issues of retention, salary scale, and benefits for all employees or only for the CEO?
  • Is the culture of the organization one which honors and respects staff at all levels or treats them with disrespect or disdain?
  • Is there an investment in bench strength? Succession planning?

You get the idea. As I have written and articulated in many settings, too many nonprofits function on the backs of underpaid and under-benefited staff. Nonprofit is a designation of the legal status of certain organizations. That should never imply, and never mandate, that those who are employees of such organizations should be expected to take vows of poverty or be treated as a serving class.

If an organization comes up looking healthy in response to the questions above, and the CEO is getting paid well, all the more power. But shame shame shame on boards who endorse luxury salaries for their CEOs while ignoring the legitimate needs of the remainder of their staff.

And incidentally, those of us on the funder side should be first in line insisting on answers to these questions.

Richard Marker teaches and advises funders from around the world through both the NYU Academy for Grantmaking and Funder Education and the Wise Philanthropy Institute, both of which he founded. His blog can be found at Wise Philanthropy.