what's a fair wage for a nonprofit CEO?

for some reason, i read (or i should say skim) paul ogden's blog. ogden is a local conservative attorney, and his blog reads a lot like advance indiana, only with less seething resentment and fewer amusing typos.

lately, ogden has been on a crusade against local nonprofits. one of his regular complaints is that they all pay their executives too much (he's posted about it six times in just the past two months). this is a puzzling attitude coming from a conservative, but he apparently believes that "nonprofit" means "everyone works for peanuts, if not free." of course, it doesn't work like that. as any conservative should know, if you want talent, you have to pay for it. $100,000 or more might sound like a lot... until you realize that most of them could earn way more in the private sector.

i mocked him for this last month, pointing him to a CEO compensation study by charity navigator that shows that most of the salaries he's so up-in-arms over are perfectly reasonable salaries for that sector. but though he did show up in the comments to call me a hypocrite, he clearly never read the report. so let's look at the report in more depth, shall we? let's start with the introduction:

Charity Navigator has completed its fifth annual CEO Compensation Study. This year's study examined the compensation practices at 5,448 mid to large sized U.S. based charities that depend on support from the public. Our analysis revealed that the top leaders of these charities earn an average salary of $158,0752 representing a pay raise of 6.1% over the previous year studied.

We know from the conversations taking place in the comment section of our charity ratings pages that many donors will be appalled by this figure. They believe that charity leaders should all but work for free. But these well-meaning donors fail to consider that these CEOs are running multi-million dollar operations that endeavor to change the world. Leading one of these charities requires an individual that possesses an understanding of the issues that are unique to the charity's mission as well as business and management expertise similar to that required of for-profit CEOs. Attracting and retaining that type of talent requires a certain level of compensation. While there are nonprofit salaries that we would all agree are out-of-line, it is important for donors to come to terms with charity executives earning a fair wage – which is roughly $160,000 according to our research.

yes, a six-figure salary is perfectly reasonable for someone with the skills to run a multi-million-dollar organization. of course, it depends on geographical location: the report finds that compensation in the midwest is below average ($148,781), and that average compensation here in indianapolis is $126,204.

compensation also varies depending on the nonprofit's charitable mission. CEOs in education and the arts tend to earn a lot more; executives for environmental, human services, or religious-based organizations tend to earn less. the size of the organization also matters, as you might imagine: CEOs at larger charities earn more.

• Above Average Pay: Organizations with total expenses greater than $13.5 million ($286,760)
• Below Average Pay: Charities with total expenses under $3.5 million ($90,747) as well as those between $3.5 and $13.5 million ($149,306)

[...] These figures demonstrate that as the size, and thus the complexities of running a nonprofit increase, so does the salary of the institution's top executive so much so that if we probe deeper into the top tier of charities (by size), we see even larger salaries. A look at organizations with total expenses between $50 and $100 million pay their CEOs on average $378,026 and organizations with total expenses of $100 million or more pay their CEOs on average $462,037.

to be sure, some nonprofit CEOs are overpaid, and the report gives a few examples. (the head of the university of delaware gets $2,377,100!) but the $80k earned by the director of the peace center, which ogden complained about today, is actually below the national average for a charity that size. and that's just one of the nonprofits paul has unfairly maligned.

running a large organization is is hard work, and to get people with the skills and knowledge to do the work properly, you have to pay them what they're worth. this isn't to say that there aren't some shady nonprofits out there—steve buyer's frontier foundation comes to mind—but you can't judge an organization merely on what it pays its executives. as the report says, "salaries really should be examined in the context of the charity's overall performance."

update: he's still at it, now maligning goodwill of central indiana. funny how an org whose mission involves giving people jobs would spend a lot of money on paying its employees, isn't it?

update: still writing nonsense about local charities. he writes "This morning I heard a radio broadcaster bragging about Irsay's charitable offer of donating $1 to United Way for ever person who attended the game last night. That amounts to a whole $67,476. Once the United Way's administrators take their cuts for their six figure salaries, there might be $476 left over to be distributed to actual charities." had he bothered to check, he'd see that only 5.8% of UWCI's budget goes to administrative expenses, whereas 85.7% goes to program expenses. of course, his argument isn't about facts. ¶

why obama won the nobel

i must confess that my first reaction upon hearing that president obama won the nobel peace prize is that this is great news, if only because it will drive the obama-haters completely bonkers. (i suspect the main reason gary welsh doesn't have a seething rant up about this is because he's too enraged to form sentences.) but on reflection, the decision makes a lot of sense.

the US is the most powerful country in the world (militarily if not economically), and less than a year ago our president was a narcissistic warmonger who continuously thumbed his nose at the rest of the world because he believed he was personally chosen by god. president obama has made a point of turning things around, of re-engaging with the rest of the world. this, in and of itself, is no small accomplishment.

but, as obama himself noted in his remarks this morning, this nobel prize isn't so much about what he's accomplished, but about what he—and the world—hopes to accomplish. it's about hope—hope that, under obama's leadership, we can turn things around after eight long years in the wilderness. yes, the award is a repudiation of bush's policies, but it's more than that—it's the world's way of saying, "we're with you, obama! don't let us down!"

obama's challenge now is to live up to the honor, to prove that he deserves it. in his first months in office, he's made some strong steps in the right direction, but also some missteps. the challenges he faces are extremely difficult, but i hope he can live up to them over the next three-to-seven years. ¶