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Hot Topics: Are Nonprofit CEOs Paid Too Much?

(Oct. 14, 2008) Chief executives at the largest charities and foundations in the United States got another healthy raise last year, reports The Chronicle of Philanthropy in its annual study of executive compensation and benefits.

The median pay increase to CEOs last year was five percent, outpacing a 4.1 percent rise in inflation. This increase is the biggest one-year raise for nonprofit leaders since the Chronicle’s 2002 survey. The median salary of executives surveyed was $326,500 in 2007 (meaning half of those surveyed made more than this and half made less). In 2006 the median salary was $308,800.

The survey was based on information provided by 291 organizations that are among those that raised the most money from private sources in 2007, as well as grant makers that held the most in assets that year.

The median income of the charities that provided data was $141.9 million. The median assets of community foundations in the survey was $1.1 billion. The median assets of the private foundations included among those surveyed was $4 billion, and the median assets of operating foundations was $286.1 million.

This year a hospital executive claimed the number-one spot in the survey for highest paid nonprofit executive. James J. Mongan, chief executive of Partners HealthCare System, in Boston, which includes Massachusetts General Hospital, earned $1,371,399 in total compensation, reports the Chronicle.

The Chronicle notes that its survey compensation numbers can also include payments like bonuses, pension contributions and allowances for housing and transportation. It should become much easier to compare compensation of nonprofit executives in 2008 and future years, the newspaper notes, due to changes in the Form 990 informational tax form that clarify how charities should report salaries and benefits.

One factor driving up salaries for big charities, reports the Chronicle, may be the trend of hiring new executives from the for-profit world. This year, the American Red Cross, the Ford Foundation, the Bill & Melinda Gates Foundation and the Nature Conservancy all tapped leaders with significant experience in corporate America.

The Chronicle of Philanthropy’s CEO compensation report summary can be found here.

What Do You Think?

eWire is asking for your thoughts and perspective as fundraisers and nonprofit leaders.

  • 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?

Please email your feedback, including your first and last name, title and organization, to ewire@afpnet.org. Try to limit your response to three to five sentences, but we’ll read any feedback you send. eWire will run a follow-up story highlighting AFP member responses in a future issue. Please write “Pay to CEOs” in the email subject line.

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