Study: CEO Salaries At Nonprofits Up In 2008
It's one of those things that irks charitable givers no end — the high salaries paid to some nonprofit CEOs.
And a new study by The Chronicle of Philanthropy, released Monday, shows that the top pay at the nation's largest nonprofits rose again last year, with some eye-popping results. But the survey also found signs that these high-dollar salaries may be starting to turn around.
Seven-Figure Salaries
Here are some of the more striking numbers: $2.1 million for the director of the Museum of Modern Art in New York; $2.7 million for the head of a health care group in Boston; $1.3 million for the president of New York University.
The survey found that many nonprofit CEOs earned half a million dollars or more last year, and that the median pay raise was 7 percent. But to be fair, says Chronicle editor Stacy Palmer, most of those salaries were set before charities and foundations felt the effects of the recession.
"Nonprofits lag behind the rest of the economy," Palmer says. "And so they weren't feeling the effects of it so much. These pay packages were set a little bit before the economy started to really tank."
And, in fact, many were set when nonprofits were flush and growing. But no more. One-third of the 325 groups surveyed say their CEOs are taking pay cuts this year, or forgoing raises and bonuses. Palmer says they probably have little choice.
"They have to go out to donors and raise money, and it's very hard to say, 'We're having all this increased need, and we're having a tough time balancing our budget, and our CEO has not taken any kind of pay cut or personal sacrifice,' " she says.
Jane McIntyre, the new executive director of United Way of Central Carolinas in Charlotte, N.C., might know better than anyone what Palmer's talking about.
"I thought it was very important to be sensitive to what the community had said," McIntyre says. "So my compensation is $142,000."
That's $142,000 compared to the $1.2 million her predecessor was set to receive before she was forced out after a huge public outcry. Now McIntyre is struggling to win back donors who fled after the scandal.
"What you don't want as a nonprofit leader is for your compensation to become the issue" McIntyre says, in effect overshadowing your organization's work.
Necessary To Attract Top Talent?
The Chronicle of Philanthropy found the most lucrative pay packages at universities and hospitals. And sometimes it wasn't the top executive who attracted the biggest bucks.
Peter Carroll, head football coach at the University of Southern California, received $4.3 million in 2008. And David Swensen, the chief investment officer at Yale, got $2.8 million.
Nonprofits are reluctant to talk about the subject, but those that do defend the high salaries as necessary to attract good talent.
Yale spokesman Tom Conroy said Swensen added billions of dollars to the university's endowment over the past decade, and could be earning far more at a for-profit firm.
"He decided a long time ago that he wanted to maximize Yale's resources for education and research, rather than maximize his own compensation," Conroy says.
And the Museum of Modern Art said Director Glenn Lowry's high pay included bonuses for overseeing the museum's expansion, and that this year, he's taken a voluntary 15 percent cut.
NPR In The Spotlight
Another big earner last year was former NPR CEO Ken Stern, who received $1.3 million as part of a buyout package. The payment was required by Stern's multiyear contract, but NPR spokeswoman Dana Davis Rehm says that won't happen again.
"This is not the sort of thing that you're going to see in a future report, because NPR is no longer signing contracts with executives or, for that matter, with anyone in the management staff," Rehm says.
In fact, NPR executives are among those listed in the Chronicle survey as taking pay cuts this year, along with the rest of the staff.
Quelling A Donor Backlash
Indeed, it's the many layoffs at charities and other cutbacks that are making high CEO salaries difficult to defend. Ken Berger, president of Charity Navigator, an online service that rates nonprofits, says he understands why many donors who use his site are mad.
"Bar none, that is the most typical comment: 'I've been giving to this charity for years. And now when I see what the CEO is making, I will never give to this charity again,' " Berger says.
But Berger also thinks some donors are unrealistic — that they don't realize how difficult it is to run a nonprofit, and that it takes a decent salary to attract good managers.
"In theory, it would be nice if we did all this stuff for free or for next to nothing ... but, you know, this is a $2 trillion industry," Berger says. "This is much more complex, I think, than a lot of people realize."
The challenge, he says, is to find a happy medium — which he thinks would be somewhat lower than what many CEOs now receive.
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Nonprofit Pay In 2008: The Chronicle of Philanthropy surveyed 325 of the nation's biggest charities and foundations on the compensation of their top executives for 2008, the first year of the recession. Here, we list the top highest-paid nonprofit CEOs.
RENEE MONTAGNE, host:
And we're going to hear now, about an issue that's been swirling around some nonprofit groups. It's the high salaries paid to the CEOs of some of these institutions. The recession is bringing some pay cuts this year, but a new survey, out today, shows that in 2008 the top pay of the nation's largest nonprofits was up.
NPR's Pam Fessler reports.
PAM FESSLER: Here are some of the more striking numbers. $2.1 million for the director of the Museum of Modern Art in New York, $2.7 million for the head of a health care group in Boston, 1.3 million for the president of NYU. The survey conducted by the Chronicle of Philanthropy found that many non-profit CEOs earned half a million dollars or more last year and that the median pay raise was seven percent. But to be fair, says Chronicle editor Stacy Palmer, most of that happened before charities and foundations felt the recession.
Ms. STACY PALMER (Editor, Chronicle of Philanthropy): Nonprofits lag behind the rest of the economy, and so they weren't feeling the effects of it so much. These pay packages were set a little bit before the economy started to really tank.
FESSLER: And, in fact, many were set when nonprofits were flush and growing. But no more. A third of the 300 groups surveyed say their CEOs are taking pay cuts this year, or are forgoing raises and bonuses. Palmer says they probably have little choice.
Ms. PALMER: They have to go out to donors and raise money, and it's very hard to say, we're having all this increased need, and we're having a tough time balancing our budget, and our CEO has not taken any kind of pay cut or personal sacrifice.
Ms. JANE MCINTYRE (Executive Director, United Way of Central Carolinas): I thought it was very important to be sensitive to what the community had said.
That's Jane McIntyre, the new executive director of United Way of Central Carolinas, who we reached on an airplane. She knows better than anyone what Palmer's talking about.
Ms. MCINTYRE: So, my compensation is 142,000.
FESSLER: That's 142,000 compared to the 1.2 million her predecessor was set to receive before she was forced out after a huge public outcry. Now, McIntyre is struggling to win back donors who fled after the scandal.
Ms. MCINTYRE: What you don't want, as a nonprofit leader, is for your compensation to become the issue.
FESSLER: And, she says, overshadow your charity's work.
The Chronicle of Philanthropy found the most lucrative pay packages at universities and hospitals. And sometimes it wasn't the top executive who attracted the biggest bucks. Peter Carroll, head football coach at the University of Southern California, received $4.3 million. And David Swensen, the chief investment officer at Yale, was listed at $2.8 million.
Nonprofits are reluctant to talk about this, but those that do defend the high salaries as necessary to attract good talent. Yale spokesman Tom Conroy said Swensen added billions of dollars to the university's endowment over the past decade, and could be earning far more at a for-profit firm.
Mr. TOM CONROY (Spokesman, Yale University): He decided a long time ago that he wanted to maximize Yale's resources for education and research, rather than maximize his own compensation.
FESSLER: And the Museum of Modern Art said director Glenn Lowry's high pay included bonuses for overseeing the museum's expansion, and that this year, he's taken a voluntary 15 percent cut.
Another big earner last year was former NPR CEO Ken Stern, who received $1.3 million as part of a buyout package. The payment was required by Stern's multiyear contract, but NPR spokeswoman Dana Davis Rehm says that won't happen again.
Ms. DANA DAVIS REHM (Senior Vice President, NPR): This is not the sort of thing that you're going to see in a future report, because NPR is no longer signing contracts with executives, or for that matter, with anyone in the management staff.
FESSLER: In fact, NPR executives are among those listed in the Chronicle survey as taking pay cuts this year, along with the rest of the staff.
Indeed, it's the many layoffs at charities and other cutbacks that are making high CEO salaries difficult to defend. Ken Berger, president of Charity Navigator, an online service that rates nonprofits, says he understands why many donors who use his site are mad.
Mr. KEN BERGER (President, Charity Navigator): Bar none, that is the most typical comment: I've been giving to this charity for years and now when I see what the CEO is making, I will never give to this charity again.
FESSLER: But Berger also thinks some donors are unrealistic - that they don't realize how difficult it is to run a nonprofit, and that it takes a decent salary to attract good managers.
Mr. BERGER: In theory it would be nice if we did all this stuff for free or, you know, for next to nothing. But, you know, this is a $2 trillion industry. You're talking about one out of every ten jobs. This is much more complex than I think a lot of people realize.
FESSLER: The challenge, he says, is to find a happy medium - which he thinks would be somewhat lower than what many CEOs now receive.
Pam Fessler, NPR News, Washington.
MONTAGNE: And to get a look at the top highest-paid CEOs at nonprofits, visit our Web site, NPR.org. Transcript provided by NPR, Copyright National Public Radio.
