Editor’s note: This op-ed is by Don Keelan, a certified public accountant and resident of Arlington. The piece first appeared in the Bennington Banner.
From a remunerative basis, there is one profession parents of college-bound children might tend not to bring to their youngsters’ attention: being a leader in the nonprofit world. The fields of teaching, medicine, law, business, finance and engineering surely garner most of the attention and discussion — and for good reasons.
Upon reviewing the Sept. 26, 2013, issue of The Chronicle of Philanthropy, maybe it’s time parents revisit and bring the nonprofit profession leadership possibilities to the dinner table — and here’s why.
The early fall issue of the Chronicle, the principle news organ of the nonprofit development field, publishes a random sampling of 300 or more nonprofit organizations. The report based upon a review of the nonprofit Form 990 federal tax filings disclosed how executives had been compensated in the prior year. What is quite revealing is the fact that the compensation levels of nonprofits, at least at the national level, are quite handsome even though they are still a long way from what senior executives in business receive.
According to the Chronicle, the median salary of nonprofit chief executives was $417,000 in 2012, as compared to $9.7 million for those executives who were included in the Standard & Poor’s 500.
According to the Chronicle, the median salary of nonprofit chief executives was $417,000 in 2012, as compared to $9.7 million for those executives who were included in the Standard & Poor’s 500. However, this comparison is not exactly “apples to apples” and more on this later.
What takes place among nonprofit’s outside of Vermont is much different when it comes to the scope, size and executive director compensation. Aside from hospitals and colleges, Vermont has few nonprofits of any size among its 8,000 registered nonprofits. Examining the financials of national/international organizations, where hundreds of millions (in some cases billions) of dollars are under management’s control — what a different world we live in.
For example, Bob Mazzuca, the CEO of Boy Scouts of America in 2012, received compensation of $1.781 million of which a good portion was a retirement payment.
James Clark, who oversees another children’s organization, Boys & Girls Club of America, received $658,000, including a $100,000 bonus.
In recent years, nonprofits have adopted many of the salary perks that the business world has had for some time — namely, deferred compensation, bonuses, housing allowances, travel, and retirement packages, among others.
The head of the United Jewish Appeal Federation of Jewish Philanthropies of New York, received $3.151 million in compensation last year — most of which was in the area of bonus and deferred compensation. For those who may not know what is deferred compensation — it is a tax-planning vehicle to put off paying taxes on compensation income until it is paid at some future date.
Until I read this month’s Chronicle I had only known of local/county United Way organizations. I had no idea of the United Way Worldwide, headed up by Brian Gallagher. Mr. Gallagher took down $1.22 million in compensation last year. As a point of reference, the amount is about twice the dollars raised annually by the United Way of Rutland County.
I note to those parents of daughters who might wish to be candidates for nonprofit executive positions one significant negative factor. Nonprofits still hold onto the same discriminatory practices that exist in the commercial world and within other professions — female executives continue being compensated at levels below their male counterparts — even though they occupy over 52 percent of the nonprofit leadership positions.
The Chronicle noted:
Nonprofit’s annual budget / Compensation Women / Compensation Men / % Below
$250,000 to $499,000 / $55,734 / $64,203 / 13%
$500,000 to $999,000 / $68,948 / $80,444 / 14%
$1 million to $2.49 million / $87,378 / $104,231 / 16%
Another intriguing compensation payment centers around the nonprofit organization known as, Inspirational Network. This TV evangelical broadcasting nonprofit compensates its CEO, David Cerullio, with an annual payment of $1,677,399 — along with his wife, who received $100,000. Their son and daughter were not ignored — each took down $100,000. If in fact this type of practice is found to be abusive it will certainly bring attention to the nonprofit sector, not unlike what had occurred a decade ago with the Pennsylvania United Way.
Early on I had noted the wide gap between what CEOs of nonprofits received versus those in private industry, a difference of a factor of 20 times. What was not reported was the scope of operations, large numbers of people employed, competition for customers as well as other factors that exist in the private sector that could in part justify the difference. Whether compensation to nonprofits’ CEOs and to S&P 500 executives are where they should be, I will leave to the experts to decide.
What is important is that the nonprofit profession is a field of endeavor that should be discussed with the college-bound generation. They can be a part of a worthwhile mission while at the same time be financially rewarded. Tax-exempt organizations make up a large portion of our state and the national economy. Nonprofit compensation levels are recognizing that impact and the need to attract capable executives.
