Do All Nonprofit CEOs Make $100K?

Executive compensation is a tricky subject for nonprofits. Since this information is available in an organization's Form 990, it's important that a CEO does not make more (or less, for that matter) than those at similar agencies lest it face public backlash.

Luckily, there's an easy way to fix this potential problem.

Get behind the numbers by participating in The NonProfit Times' 2013 Salary & Benefits Survey. In addition to the tantalizing data about average salaries ($107,561 for  CEO/President/Executive Directors) and salary increases, the survey goes several steps beyond, drilling down to details about benefits, bonuses and turnover rates to present a rich tapestry of key data and information.

The completion deadline for the survey is July 31, and those who finish on-time will be entered to win an iPad Mini. You can start the process, which takes no more than an hour, by visiting the survey application page.

Report: Nonprofit Used State Funds For Perks

A nonprofit funded by the state of New York is being accused of paying for excessive executive perks, according to a report issued by the office of state Comptroller Thomas DiNapoli. The findings are now being referred to U.S. Attorney Preet Bharara's office for review.

Phoenix Houses of New York, which operates a number of residential and outpatient rehab programs in New York City, Long Island, and upstate New York, is alleged to have provided $223,000 worth of inappropriate perks while under contract with the Office of Alcoholism and Substance Abuse Services (OASAS). This includes allegedly paying $91,050 for executive bonuses, $40,447 for fringe benefits, and $35,996 for vehicle leases from July 2009 to June 2010.

The report also alleges that Phoenix Houses failed to report $290,000 in Medicaid revenue to OSASAS which would have reduced the amount the agency's payments to the nonprofit.

"This was money intended to treat people struggling with substance and gambling addiction, not to subsidize unwarranted perks for high-salaried executives," DiNapoli said. "My office will work closely with U.S. Attorney Bharara's office to ensure that those abusing the public trust are held accountable."

Auditors and investigators also discovered that one employee allegedly made $4,000 in "improper" purchases of Wal-Mart gift cards used for alcohol, cigarettes, and other inappropriate items. The employee allegedly covered up these purchase by submitting falsified receipts.

Based on the finding, DiNapoli recommends that OASAS should strengthen controls to monitor Phoenix Houses' contract compliance, recover the alleged improper funds, and recover executive overpayments if they are determined to not be justified.

A call to Phoenix House for comment was not immediately returned.

You can read the full report on state Comptroller's Office website.

The Buzz On Executive Compensation

Compensation for nonprofit executives is a big topic of conversation these days. Organizations that receive a lot of tax payer money are under heavy pressure to not give their top employees salaries or perks that seem, in the public eye, to be excessive. Some states have even proposed legislation placing caps on executive salaries.

With The NonProfit Times' 2012 Nonprofit Organizations Top Executive Positions Salary and Special Perks Report, you will have all the information you need to ensure that your top employees are not being given salaries or benefits that are out of line with the competition.

The report uses the findings of NPT's 2012 Nonprofit Organizations Salary and Benefits Survey to examine the top 15 executive level positions within the nonprofit sector including base salary, bonus practices, total cash compensation, salary increases, employee turnover, and more. The 15 positions examined in the report are as follows:

• Chief Executive Officer/President/Executive Director;
• Chancellor/President;
• Chief Operating Officer/Associate Executive Director;
• Executive Vice President;
• Chief Administrative Officer;
• Chief Advocacy Officer;
• Chief Development Officer;
• Chief Financial Officer;
• Chief Human Resources Officer;
• Chief Information Officer;
• Chief Marketing Officer;
• Chief Medical Officer;
• Chief Program Officer;
• Chief Scientific Officer; and,
• Chief of Staff.

To give you an idea of the kind of information you will find in the Top Executive Positions Salary and Special Perks Report, here are the top 10 perks that were given to CEO/President/Executive Director positions:

• Car or Car Allowance: 44.96% of respondents
• Additional Vacation Days: 37.98%
• Excess Life Insurance: 27.13%
• Reserved Parking: 15.50%
• Supplemental Executive Retirement Plan: 14.73%
• Supplemental Disability Insurance: 13.18%

Head to our online store to purchase the 2012 Executive Salary and Perks Report, or any of the other four Salary and Benefits Reports we have available.

Study: Nonprofit Hospital CEO Pay Doesn't Affect Quality Of Care

A study by the New Hampshire Center for Public Policy Studies (NHCPPS) found that there is no correlation between the quality of care at nonprofit hospitals and the pay of their CEOs.

The Bangor Daily News today reported on the study that showed that the size of a CEO's compensation package correlated closer with the size of their hospitals rather than the quality of its charitable care. For example, the head of Lebanon, N.H.-based Mary Hitchcock Memorial Hospital -- $1.1 billion in revenue -- made $785,000 in 2009, while the CEO of Colebrook's Upper Connecticut Valley Hospital -- $15 million in revenue -- made a comparably smaller $150,000 that same year.

New Hampshire Attorney General Michael A. Delaney, who hired NHCPPS to determine how CEO pay has changed in the state's 23 nonprofit hospitals, said in a statement that “Given these hospitals exist to provide quality health care and are required to provide community benefit and charitable care in light of their non-profit status, the lack of such a correlation is a significant concern."

Rather than just relying on public Internal Revenue Service (IRS) filings, NHCPPS also made use of internal hospital records including CEO employment contracts, board minutes, executive memos, and W-2 forms from 2005 to 2010.

The study found that all of the nonprofit hospitals in the state met IRS standards for executive pay, except for a few instances. Three of them didn't provide written records from board meetings where CEO compensation was a topic, and two smaller institutions didn't use pay at similar hospitals as a benchmark for their executives.

You can read the full story in The Bangor Daily News.

NY Gov. Proposes Salary Cap For Nonprofit Execs

N.Y. Governor Andrew Cuomo yesterday proposed new regulation that would place caps on the salaries that nonprofit executives receive.

As reported by The Daily News, the new rule would cap the amount of money towards an executive's compensation package at $199,000. The actual pay package could be higher, but the nonprofit would have to find new funding sources to make up the difference and get special permission. Salaries could also fall no higher than the 75th percentile for the field in which the organization works.

The new rule would only impact nonprofits that receive 30 percent of their total funding from the state. The Daily News reported that the Bronx-based Soundview health clinics -- run by recently convicted ex-state Sen. Pedro Espada -- would have been in real danger of losing state funding. Nearly half of the organization's funding came from the state, and Espada's $612,000 salary placed him above the 75th percentile in that field ($380,000).

Gov. Cuomo's announcement shouldn't come as a surprise. He vowed to crack down on excessive pay for executives during his State of the State address in January. Before that, he created a task force to investigate pay at nonprofits that receive taxpayer money. This stemmed from a New York Times article that reported high salaries and perks at the Young Adult Institute. Executives at that organization reportedly received $1 million a year, in addition to ethically questionable perks, such as billing the nonprofit to cover their children's college tuition.

You can read the full article on Cuomo's announcement on The Daily News' website.

Art Museum Director Paid $1 Million

The Metropolitan Museum of Art in New York City, NY paid its director $1.04 million in salary and benefits in 2010, according to a report in Bloomberg.

The article states that Thomas P. Campbell, who was named director in 2009, earned a 2 percent increase from his previous salary. Overall, he made $653,402 when the nearly $389,051 in benefits is excluded. That is way below the average for executives in the arts field, as shown by NPT's 2011 Salary and Benefits Report. Still, it is comparable to other top museum jobs. The Museum of Modern Art's head, Glen Lowry, earned $1.6 million in compensation in 2009.

The increase in salary for Campbell coincided with the museum's highest attendance levels in nearly four decades. For the year ending June 2011, attendance was 5.7 million, a 9 percent increase. This was due in large part to the wildly popular exhibit showcasing clothes and accessories designed by the late fashion designer Steve McQueen.

A spokesman for the Met told Bloomberg that the increased benefits Campbell received was due in large part to his move to a museum-owned apartment in September 2009. The apartment, which is rent-free, is used for museum-related entertainment and events. The spokesman added that Campbell's travel wasn't part of compensation.

You can read the full story in Bloomberg.

Nonprofit Ordered To Return $130G

A Massachusetts state auditor has demanded a Charlestown nonprofit return $130,000 after it was accused of using the funds on outside expenses.

The Boston Herald reported today that Charlestown, Mass.-based Life Focus Center Inc. allegedly used the funds, which were intended to help the disabled, to pay for food, alcohol, and other expenses while on a vacation in Disney World.  The organization has denied these claims.

State auditor Suzanne M. Bump called the charges a "horrifying" waste of taxpayer money, and ordered Life Focus to refund $130,000 to the state. This information was revealed after an audit of the nonprofit, which showed that Executive Director Jack Millerick charged over $123,000 on the agency's credit card in fiscal years 2009 and 2010. While a good portion of the money was allegedly spent during the Disney World vacation, nearly 40 percent of the purchases in 2010 were made in New Hampshire, where Millerick has a vacation home. He has told Bump's office that all of the purchases made during the Disney vacation were business-related, and blamed payments for gas on "human error."

Aside from the improper spending, Life Focus Center executives are also accused of hiring family members.  The auditor's report stated that Millerick hired his wife, Karyn, to serve as communications director, a position which paid her $85,000 in 2010. He also paid his brother-in-law $6,600 for maintenance services but did not report those expenses to the IRS or state tax officials.

You can read more about this story in The Boston Herald. Interested in reading more about finance?  Sign-up for our financial eNewsletter, Exempt.

How Much Do Nonprofit CEOs Make?

Nonprofits often conjure up images of volunteers and other hard workers who forgo the big payrolls of the corporate world to do work to help society.  The truth of the matter is, however, that most nonprofits don't run much differently than a typical business.

The Advertiser recently wrote an article about executive compensation for nonprofit CEOs.  They focused on Sandra Purgahn, president and CEO of Goodwill Industries of Acadiana.  She earned $132,825 in 2010, and that number was $15,000 higher in 2009 because of a performance bonus.  Purgahn and her husband, Charles, founded Goodwill of Acadiana in 1990, and have been in charge of the organization ever since.  Charles still works there as vice president of business services, earning $101,304 in 2010.  Two other VPs at Goodwill earned $91,768 and $83,748 in 2010 according to the organization's Form 990.

The board of the organization defended the couple's salaries to The Advertiser, saying they are in line with similarly sized organizations.  Even after their revenue dropped by $200,000 in 2010, Goodwill would still classify as a mid-large sized organization.  If you are interested in finding out the pay of other nonprofit CEOs, you should check out The NonProfit Times' 2011 Salary and Benefits Report.  You can also read the full story on Sandra Purgahn in The Advertiser.

NY Governor Cuomo To Investigate Nonprofit Executive Pay

In a blog post on The New York Times, it was reported that New York Governor Andrew Cuomo planned to create a task force to investigate executive compensation at nonprofits that receive taxpayer money.  The task force will consist of: NY inspector general Ellen Biben, Secretary of State Cesar Perales, NY Medicaid inspector general James Cox, and superintendent of the Department of Financial Services, Benjamin Lawsky.


 Cuomo's decision came after a Saturday report in the Times reported on the high salaries and perks executives got at the Young Adult Institute.  Specifically, the article tells the story of Philip and Joel Levy, who had headed the organization since the 1970s before their sudden retirement at the end of June.

In addition to the close to $1 million in annual salaries they made each year, the Levy brothers had some questionable perks.  To name just a few, they were allowed to bill the organization to cover their children's college tuition, and Philip charged the institute $50,400 to pay for his daughter's co-op in Greenwich Village.  The article also detailed other high salaries among nonprofits that relied on state Medicaid funding from the Office of People With Developmental Disabilities (OPWDD).  These salaries were far and away higher than those paid at similarly sized organizations.

According to the NYT blog post, Nonprofits may lobby against regulations to executive compensation, as they had in similar cases that occurred in Massachusetts.  In an era where Americans have a bad taste in their mouths from the bank bailout and stories of corporate greed, any executive compensation that is seen as executive is going to be highly scrutinized.  If there is any update on the findings of the task force, we will be sure to post them here.  In the mean time, head on over to The New York Times to read the full blog post on this topic.

Nonprofit CEOs Earned Big Paydays in 2010

Who said it didn't pay to work at a nonprofit?

According to a review of annual nonprofit reports by The Buffalo News, nonprofit CEOs earned hefty salaries in the past year.  In particular, the salaries for nonprofit health insurers in Western New York were particularly high.  For example, James Kaskie, CEO of Kaleida Health, earned a whopping $2.3 million annually. 

Even more curious, however, was that some of these organization saw their CEO compensation increase even as their overall earnings decreased.  In particular, HealthNow President Alphonso O'Neil-White saw his pay increase 11% (to $1.83 million) in 2010, even though the organization's surpluses fell to $52.7 million after a 2.3 percent drop in revenues.  HealthNow explained this discrepancy by saying that the decrease in revenue reflected "strategic initiatives" to cut costs and improve services.  As for White's pay increase, they said this was justified by the HealthNow's performance in 2009, when the company posted a $62 million surplus.

Executive compensation is obviously a sensitive issue these days, when many families are struggling to stay on their feet, so this news is probably going to be outrageous to some.  Read the full article about CEO pay at The Buffalo News. 

Two More MA Nonprofit Health Insurers Rethink Their Board Pay

Excessive Executive Compensation has been an issue for the public ever since the bank bailouts.  It's all too common to hear about big Wall Street firms, that have received government bailout funds paying their executives an absurd amount of money.  However, now it's nonprofits that have the excessive compensation spotlght on them.

After Blue Cross Blue Shield of Massachusetts suspended the pay of their board members after intense public criticism (as well as an outcry over the $11 million severence package given to their ex-CEO), more nonprofits are reconsidering the way they handle executive and board pays.  According to the Boston Globe, two more nonprofit health insurers in Massachusetts are going to consider suspending their board pay after MA Attorney General Martha Coakley said other insurers should follow Blue Cross's lead.  The insurers, Harvard Pilgrim Heath Care and Tufts Health Plan, announced ther plans on Thursday.

Paying nonprofit board members, while not illegal, is considered extremely unethical.  In the Boston Globe article F. Warren McFarlan,a professor at Harvard Business School, harshly criticized this act:

“On for-profit boards, you expect to be paid. In the nonprofit world, it’s about time, talent, and treasure. It’s about serving the organization’s mission."

It is unclear at this point whether these two organizations, along with the rest of the nonprofits that pay their boards, will decide to actually suspend board pay and reduce excessive executive compensation.  One would think they almost have no choice if they want to avoid the wrath of an angry public.