Can You Get Rich Running A Charity?
Nov 6, 2012 - 3:33:46 PM
Charity Navigator Releases Study Showing Excessive CEO Pay is Not the Norm at America’s Largest Charities
(HealthNewsDigest.com) - GLEN ROCK, N.J., November 6, 2012 –According to a study by Charity Navigator, America’s largest and most utilized charity evaluator, the median charity’s chief executive officer’s compensation is $132,739. This represents a raise of just 1.5% over the previous year.
The study examined CEO compensation at 3,786 mid to large charities in America to help donors, policymakers, charity Boards and others understand how top pay varies by the charity’s location, size and mission. Findings from the report include:
The recession put a halt on big raises: Salaries for the CEOs in this study increased modestly since the recession: just 0.8% from 2008 to 2009 and 1.5% from 2009 to 2010. These fairly small increases come after the 4.7% median increase charity CEOs received from 2007 to 2008.
CEO compensation differs based on the charity’s mission: The data shows that top pay at charities can vary greatly by mission with the heads of Educational charities earning $90,000 more than those running Religious charities.
Just like in the for-profit sector, location impacts salaries: CEO salaries at nonprofits reflect the regional variation in the cost of living. For example, CEOs at charities in the Northeast ($156,914) and Mid-Atlantic ($150,000), which include cities like Boston, Washington D.C. and New York, tend to earn higher salaries, than those in the Mountain West ($111,920) and South ($118,636), which include cities like Cleveland, Nashville and Charlotte.
The bigger the charity’s budget, the bigger the CEO’s wallet: Not surprisingly, the higher the charity’s total expenses, the more likely it is that the CEO will earn higher compensation. Charities with over $500 million in total expenses report a median pay of $477,920 for their CEOs whereas charities with $1 - $3.5 million in total expenses report a median pay of just $93,974.
Mission, location and size also impact the CEO’s raise: Leaders at charities in the Southwest (2.9%), those focused on Educational issues (2.0%) and those at Large organizations (2.6%) received the greatest median raises. In contrast, CEOs at charities in the South (0.8%), those working at Religious charities (0%) and those running Small organizations (0.8%) received the smallest increases in pay.
While most nonprofit leaders earn reasonable salaries, a handful earn excessive wages: 6 of the charities in the study pay their CEO more than $1 million. That’s down from calendar year 2008 when 14 charities in the study had CEOs that were paid at least $1 million.
Some charities report that they essentially set their CEO’s pay in a vacuum of information: Nonprofit Boards should have a documented policy for establishing the CEO’s pay. That objective process should include a review of the CEO performance and benchmarking against comparable organizations. 543 charities in this study reported that they don’t have a policy in place for determining their CEO’s pay.
“With an average salary of roughly $130,000 and a raise of just 1.5%, our findings demonstrate that most nonprofit leaders are not excessively compensated nor did they receive increases that were out of line with the times. We hope this study helps improve the public’s confidence in nonprofits and equip donors to evaluate the appropriateness of an individual charity’s CEO compensation in relation to its location, size, mission and overall performance,” said Charity Navigator, president & CEO, Ken Berger.
CEO pay includes salary, cash bonuses and expense accounts, but not contributions to benefit plans or deferred compensation that is allocated to be paid in later years. The data for this report was gathered from the charities’ Forms 990 (annual informational tax filing) for the fiscal year ending 2010.
About Charity Navigator (www.charitynavigator.org)
Charity Navigator is the largest charity evaluator in America and its website attracts more visitors than all other charity rating groups combined. The organization helps guide intelligent giving by evaluating the Financial Health and Accountability & Transparency of nearly 6,000 charities. Charity Navigator accepts no advertising or donations from the organizations it evaluates, ensuring unbiased evaluations, nor does it charge the public for this trusted data. As a result, Charity Navigator, a non-profit 501 (c) (3) organization itself, depends on support from individuals, corporations and foundations that believe it provides a much-needed service to America's charitable givers. Charity Navigator, can be reached directly by telephone at (201) 818-1288, or by mail at 139 Harristown Road, Suite 201, Glen Rock, N.J., 07452.
To access the complete study, including tips to help donors evaluate CEO pay, visit: http://www.charitynavigator.org/ceostudy
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