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Members Share Insights on Nonprofit CEO Salaries

(Nov. 3, 2008) In a recent issue, eWire asked readers if they thought nonprofit CEOs are paid too much. Our respondents didn’t think so—up to a point anyway.

In the Oct. 14 story, “Are Nonprofit CEOs Paid Too Much?” eWire asked AFP members the following questions:

  • Are salaries for large U.S. nonprofits grossly out of line?
  • Do nonprofits need to offer executive salaries competitive with the for-profit world to attract effective leaders?
  • What considerations need to be made to understand this issue or give it context?
  • Would it help or hurt to pay CEOs of large hospitals, universities, human service or other charities less?

Here is what your colleagues had to say.

“In response to your email about CEOs making too much:  Being a small non-profit CEO making only $65,000 per year I would say that making millions as a CEO is a bit excessive, but $300,000 to $500,000 is reasonable.  I know that to compare my size of corporation to a for-profit, I am probably making half what the for-profit CEO makes.”

DiAnn L. Baxley, chief executive officer, Susquehanna Valley Women in Transition, Lewisburg, Pa.

“In response to your story and your question, I believe that CEOs of nonprofit organizations ought to be paid to perform a job, as a professional and an expert in the field in which they are involved. Whether that is the management of a multi-million dollar budget and operations of a large nonprofit or overseeing the establishment of a grassroots organization, fairness ought to be the determining factor, and prevailing wage ought to be the standard for that fairness.

“It is unfair that individuals working in the nonprofit field so often must justify the salary that they are making; too many people believe that "nonprofit" means that no one employed in the sector ought to be making a livable wage.

“If the conversation or focus was instead shifted to the impact of that individual in her/his position, then those looking from the outside in might be able to see the value-added of hiring a person whose knowledge and skill sets more than justify any wage they are earning.”

Yolanda Torrecillas, development director, Wellspring Women's Center, Sacramento, Calif.

Expert Perspective

We also contacted Elizabeth Boris, Ph.D., director of the Center on Nonprofits and Philanthropy at The Urban Institute in Washington, D.C., to get her thoughts and perspective on nonprofit CEO salaries. Boris is a noted expert on nonprofits and was a featured speaker at AFP’s recent think tank.

First, Boris noted that the average compensation of nonprofit employees across the board is less than $40,000 per year. She emphasized that, overall, nonprofit sector wages are lower than the for-profit sector and many do not receive benefits. For CEO compensation, she said it really depends on the field an executive is in and the qualifications he or she brings to the table.

“CEO compensation really varies tremendously by the size and type of organization,” Boris said. “You need to look at the number of people being managed and the size of the budget that the executive is responsible for.” She noted that media reports on executive pay are often based only on the very largest nonprofits.

“That is not to say that every high salary I see out there is justified,” she said. “Salaries of $1 million or more are certainly excessive in a lot of cases. But I would be less concerned to see the top surgeon at Johns Hopkins University making that kind of salary than a CEO of a very small organization.”

Boris explained that the board has to decide what level of salary will entice the right talent, but that they should always be mindful of using the money as efficiently as possible.

It’s a complex balance given public perception about the amount nonprofit employees should be paid, she added. A successful for-profit executive might take a salary cut to lead a nonprofit, but will only accept so much of a cut.

“It is a question of values and in some sense the market,” Boris said. “In some cases a nonprofit executive has been in the sector for many years and has gradually reached high pay levels and expects to maintain that. In other cases a nonprofit executive would accept less pay than what they were offered.”

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