Every year, without fail, we have people in the press discussing compensation of CEO’s within the non-profit sector. I am not sure how we arrived at a place where the aim of many organizations is to pay professionals in charities as little as possible. While I am aware of executives who are paid competitively in the field, so often, I read or hear about excellent executives who are not paid nearly enough for the work they do and the skills and experience they must possess in order to be in that position.
Salary is always a touchy subject. The general public sometimes has an issue talking about money and as much as our culture is one of conspicuous consumption, the topic of compensation is oftentimes a sensitive subject.
I recognize the fact that non-profits exist not for the benefit of shareholders. They exist for the benefit of society. That being said, CEO’s are required to be professionals. Typically, in non-profits, CEO’s should have the following credentials:
- Graduate degree preferred
- 15 plus years of experience in the non-profit sector
- 10 plus years of management experience
- Excellent oral and written communication skills with a track-record dealing with the general public, making public presentations and engaging media
- Outstanding business and fiscal management skills
The fact of the matter is many times, non-profit CEO’s have the same, if not more, experience and skills in a variety of areas than their commercial colleagues. Thus, executives should not have to feel ashamed for earning competitive wages since most are doing excellent jobs, working much more than the standard 40-hour work week with great demands on their expertise from a variety of constituents.
When I worked at the non-profit I founded after the 2004 Indian Ocean Tsunami, I too was faced with criticism for my compensation. The charity’s board set my compensation each year based on performance. One year, I acquired an $8 million unrestricted grant and another year I doubled the outreach capacity of the organization.
As I have mentioned in the past, I took the organization from a start-up to one with over $75 million in revenue. By that point, earning a mid-six-figure salary should have been considered acceptable because of the fact the compensation fell into best practice of organizations of a similar size and scale, but some parties chose to have a field day.
The fact of the matter is that today, leading individuals and organizations such as Dan Pallotta, the Stanford Social Innovation Review and Guidestar are leading efforts to end what has been termed as the “non-profit starvation cycle”. This is the myth that donors seem to have about not paying overhead costs in their contributions and giving 100% of their donations to programmatic costs.
What donors need to understand and focus on, more importantly, is not so much how much is being spent on non-profit overhead, but what programmatic outcomes are being achieved by the organization and how much those outcomes truly cost. A commercial venture would never encounter a situation where investors say they will not fund the company’s operating budget. In business, investment in research and development, administration, professional development and competitive salaries, for example, are all acceptable.
As we know, businesses must have money in order to thrive and excel. It is unsexy to talk about, but utilities bills, salaries and operational costs need to be paid. And, along the same lines, it needs to become widely accepted that non-profit executives should be paid solid wages for the work and credentials they need to have in order to be competitive. That is how non-profits will retain the best and brightest.