Should Executive Pay be Capped at Jewish Organizations During (and After) the Pandemic?
By Jennifer Laszlo Mizrahi
The economic devastation – more than 33 million have lost jobs – is unbearable. Philanthropy and governments are pivoting their focus in response to the surge of hunger, homelessness, mental health and other pressing issues. Ethically, this is what our teachings guide us to do. With this morally-driven pivot, funders are ramping up support for organizations that save lives, and ramping down organizations that enhance lives.
Simply put: the survival of organizations that a) do not save lives, and b) require in-person participation, are c) at risk.
Many nonprofit organizations, including Jewish groups, received government PPP loans which require maintaining their headcount and overall payroll numbers until July 1. What then? It may well be a bloodbath of layoffs and cuts.
Should one of their first cuts be executive pay? Should a pay cap for Jewish nonprofits – including for Rabbis and foundation staff – roughly mirror top salary pay caps for the Federal government?
POINTS TO CONSIDER:
- Dr. Anthony Fauci has a salary cap of $197,330, while he leads the science behind saving Americans each and every day.
- I, for one, feel we are getting a great leader in him.
- Speaker of the House Nancy Pelosi makes $222,000.
- She must maintain two homes – one in CA and one in DC.
- She gets a generous benefits package – not included in the $222K.
- The Speaker of the House’s total package is worth somewhat more than 300K.
- Top civil servants have a pay scale which is less that the Speaker’s salary.
- Nonprofit salaries are the result of donors’ generosity.
- Donors receive tax deductions for their gifts.
- One might say, the tax deduction is like a subcontract, or outsourcing, of a social good.
We want the best and brightest for elected officials and people in leadership in civil service.
We also want the best and brightest in Jewish leadership. The Jewish community is blessed with many wonderful CEOs, Rabbis and foundation professionals.
Executive salaries rightfully range greatly by the size of organizations and their scope. Yet there are Jewish organizations that pay their (almost always male) CEOs the salaries of Dr. Fauci and Speaker Pelosi combined – or even three times the salary of Dr. Fauci or Speaker Pelosi.
Can we afford disproportionate salaries in this period of pandemic proportions? Moreover, when others at the same organizations, who also work hard and want their children to attend Jewish day schools and summer camps, make so much less money – is this the right thing?
And do we need to pivot our work priorities to focus on those most at risk during this crisis?
There is nothing legally that stops Jewish groups from paying a CEO $10 million a year if they did not want the tax-deduction and simply made them for-profits. But the fact is that nonprofits are subsidized by taxpayers and thus, at least in theory, they should be for the public good.
In my opinion, one who leads a nonprofit is choosing public service. Some choose to serve the public as teachers, firefighters, or as military service members. Their compensation is less about money and more about making the world a better place. Tikkun olam. While the financial compensation is knowingly less, the sense of civic duty and socio-emotional compensation is, hopefully, higher.
This conversation is also taking place at non-Jewish nonprofit organizations where there is press coverage around pay disparities. Indeed, here is the spreadsheet for folks to calculate their salary compared to their CEO and compared to their institution’s endowment. We have also seen a lot of coverage of this in the for-profit space where Jeff Bezos of Amazon is the record breaker of pay-disparities while his front-line workers risk COVID-19 to deliver our packages.
Clearly, today’s current CEOs and top execs and clergy were recruited at a certain pay level; changing mid-course would, in some ways, be unfair. They have a home(s), children in schools and set financial obligations. However, COVID-19 is unequivocally unfair: unfair to those suffering loss of life, loss of loved ones, loss of income, loss of health, loss of education, loss of freedom, loss of normalcy.
I clearly don’t have all the answers. I am raising questions. I do not want to be the arbiter of any of this. Boards will make their decisions on appropriate pay; staff will decide if they want to live with it and donors will donate where they are comfortable. Still, when such unfair loss due to the Covid-19 crisis is rampant and random, it seems that everything must be on the table.
Leadership and solidarity call for new action and sacrifice. For example, world leaders – such as South Africa’s president Cyril Maphosa and his ministers, took a 33% pay cut for three months during COVID-19; and New Zealand’s Jacinda Ardern and her ministers, took a 20% pay cut for the first six months during COVID-19, to show “leadership and solidarity.”
We need the best people to choose to lead nonprofits and our government. Through better and through worse. Through sickness and through health.
I do expect many more in nonprofits will lose jobs and/or have reduced income once the PPP loan obligations end. And it will come in ways many did not expect. For example, the COVID-19 ‘hold’ on elective surgeries and medical procedures are impacting doctors’ incomes. (Irony of ironies: frontline doctors and nurses whose lives are at risk treating COVID-19 patients are now enduring pay cuts of up to 20%, more or less!) Commercial real estate is getting slammed as people cannot pay rents. The downstream impact? Less money to donate.
Meanwhile, expenses for group and nursing homes have increased significantly, as have home healthcare for seniors and people with disabilities.
For a long time, there has not been pay equity in Jewish organizations. Indeed, very few Jewish women are chosen to be CEOs, and when they are, they are paid much less than the men who are doing the same level jobs. Maybe the answer is not to try to get women to be paid north of 300K – 800K like some of the men, but to bring executive salaries down to earth – paralleling the federal pay scale – so more employees can continue to do virtuous work as a team where all permanent employees at our nonprofits make a living wage.
I do not believe that there are even 10 Jewish women who have been paid more than 300K – ever – for leading a Jewish nonprofit group. Yet there are many extraordinary Jewish women CEOs, clergy and foundation professionals who do great work for much less. For a sense of the scales, look at this piece from the Forward, three years ago: Note the top 25+ salaries are all men. If you want current numbers, I invite you to consult GuideStar where you can instantly find the salaries of the nonprofits along with a lot of other useful information.
Don’t get me wrong. There are many amazing Jewish leaders who are highly paid. Some of them are my best friends (or at least they were until I published this piece ?). I want to keep them happy in their jobs and continuing their leadership. But the world has experienced more changes in the last ten weeks than it usually experiences in a decade. So perhaps the time has come to recalibrate: maybe the coronavirus is also teaching us to look toward balancing the greater good of public service with fair compensation – and that the time has come. This is especially true in the organizations that will do layoffs, cut services or both.
Still, nonprofit executives spend all their days doing good. What about people in other professions? I urge everybody to do likewise, among them, bankers, big corporations, doctors, investors, lawyers, technology professionals and others.
I am certainly not perfect on these issues. I also recognize that I write from a position of privilege. That’s why we’ve stepped up our giving and are still looking for new ways to help. I am thrilled that so many others are doing the same. This will be a marathon, not a sprint. Indeed, the most important thing we can do today is to try to bring forward smart public policy that can protect as many people as possible.
Let us all who have financial privilege ask if we could live on the salary of Dr. Fauci during this period and do more for others.
In a pandemic when people are dying and millions are out of work – the need is almost unfathomable. Indeed, our federal government just pumped $2.2 TRILLION into the economy and the Fed put in billions in other supports into the economy as well. And still, the need will continue.
There are many in the Jewish community who signed the Giving Pledge – to make massive charitable gifts when they die. Bill Gates is a good model for those people – give it now. No matter your financial status, however, we are all are valued and are needed. Lead now.
Ken yehei ratzon. May it be so.
Jennifer Laszlo Mizrahi is co-founder of the Mizrahi Family Charitable Fund. She can be reached at JLM@LaszloStrategies.com.