Well, now it's happened. That nasty Bill Aramony and his cronies at United Way of America have gone and blown the lid off the dirtiest secret this side of Watergate. Non-profit executives are getting paid way, way too much and -- nan-ny-nan-ny-poo-poo -- they've been caught red-handed.
Come on folks, get real. Hysterical critics notwithstanding, it's time we all looked carefully at the issues involved in executive compensation in non-profits.
First, most non-profit executives make a fraction of what they could in the for-profit marketplace. The $460,000 Aramony-type salaries are only newsworthy because of their rarity. For every Faye Wattleton, former executive director of Planned Parenthood, making $200,000, there are a thousand local top executives making under $50,000.
Is Faye Wattleton worth that level of compensation? In my book she was worth every penny of that salary. Whether you agree with her views or not, she was an articulate spokeswoman for her organization, an excellent manager, from all reports, and has a critical mind that quickly grasps issues and their implications for her cause.
I'm the first to agree that there is a point at which a non-profit executive's salary crosses a line and can be viewed as excessive, as a violation of the public trust. At that point one wonders at the real motivation of the executive, and the organization's board of directors. But, the real problem is not that some top non-profit executives make too much money. No, the more basic problem is that most executives make too little.
I know of a non-profit executive in Baltimore, for example, who has grown his organization from scratch to a respected force in providing critical services to Marylanders, who has entrepreneurial skills that I'd match against many for-profit business leaders, and who has more than a decade of experience in his area of non-profit expertise. Incredibly, this man is making under $50,000 a year.
How, I wonder, can we expect our non-profit organizations to function at a high level of efficiency without adequately compensating their leaders? As a donor, I want to be sure that my money is not wasted on inefficiencies. Paying better salaries to our non-profit employees to attract the best and the brightest to the noble work they do just makes good business sense in my book.
The media are partly to blame. In the feeding frenzy following the revelations about Mr. Aramony, I recall how the press scrutinized the salary of our local United Way top executive, who gets paid a healthy $140,000, a salary I consider adequate, but not excessive.
How many executives of $36 million, for-profit companies, would get paid only $140,000, without any equity stake in the company, without profit-sharing, without stock options? And that's without any consideration of job expectations, like being out six nights a week on business.
No, I think the United Way of America debacle has kindled a healthy debate in our society. My only regret is that some spineless boards and wimpy non-profit executives will wither under pressure and agree to salary cuts -- actions that will only serve to feed the shark frenzy further. To do so is to miss the larger issue.
Just what are our non-profit executives worth to us all? How much are their experience and management skills worth to the community? How much does it benefit our pocketbook to have their creativity and experience available to all of us in resolving some of the difficult problems our communities face? Study after study shows how much more effective non-profits are in solving social problems than are local, state and national government agencies. And we all pay for those efforts with our tax dollars.
One thing we should be doing now is looking at issues of accountability in our non-profit organizations. If compensation were linked to performance, similar to the for-profit sector, the majority of donors would be pleased, as their gifts would be providing a higher rate of return. Then we might be more comfortable with our non-profit executives making a decent living while they help others in the community to live decently.
Les Picker, a consultant in the field of philanthropy, works with charitable organizations and for-profit companies.