Non-profit Millionaires

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Did you hear that the CEO of the Boys and Girls Clubs of America made $1 million dollars in 2008?

A group of Republican senators, led by the Senate Finance Committee’s ranking member Sen. Chuck Grassley, R-Iowa, sent a letter…criticizing the non-profit organization’s use of tens of millions of dollars in federal funds that it receives every year.

[...] the letter specifically cited [CEO Roxanne] Spillett…for raking in $988,591 in total compensation in 2008, according to IRS filings.

That’s right.  A million dollars.  It seems pretty astounding that an organization dedicated to public service and opposed to distributing profits can get away with paying someone a million dollars, especially one that boasts on its website that its “efficient use of resources has won national recognition.”

I have to admit, I am empathetic to the idea of paying competitive salaries to non-profit executives.  The work is as hard, if not harder, than that of any other sector and you are forced to deal with its ambiguity of success.  With evidence-based funders and impact/efficiency critics (myself occasionally included)  questioning the difficult-to-measure outcomes of your efforts, it can seem pretty thankless.  Anyone not particularly keen on having their good intentions judged, or carrying any significant education debt, will undoubtedly consider if their efforts might be better compensated in the private sector.

And one should at least consider the scale of this organization.  BGCA operates over 4,000 clubs nationwide, with over 50,000 employees, and serves over 4 million kids each year.  Spillet is essentially paid $0.25 per kid – not a bad price to pay if she is able to successfully fulfill her mission: “To enable all young people, especially those who need us most, to reach their full potential as productive, caring, responsible citizens”

But a million dollars?

For argument’s sake, lets dig a little closer into the numbers:

[...] of Spillett’s total compensation, $360,774 was her base salary, which the organization said had not changed since 2006. She also received an “incentive based on performance” of $150,000 as well as benefits, expenses and contributions to deferred retirement plans totaling $477,817.

The numbers still seem shocking, but perhaps there is potential in “incentive based on performance.”  If folks in the non-profit world want to justify this kind of compensation, it seems to me the best way is to tie it to impact.
Its essentially what the private sector does when it buries the bulk of executive compensation in stock options.  Pay for outcomes, not just leadership.

The key is transparency.  Unfortunately, we have no idea what Spillet’s incentive was based on, but I’d guess that if people knew that her compensation came as a result of increasing the rate at which teenagers graduate high school and earn college degrees, they may not be as appalled by the prospect of paying her a quarter per kid to do it.

Thoughts?

p.s. Not to be a hater, but BCGA and others could at least take 1/1000th of these salaries and build decent websites?  No one is gonna want to miss out on the impending iPad fundraising bonanza.

Posted on April 9th 2010 in news

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