With all the talk in Washington about restricting bankers' pay, we suppose it was only a matter of time before legislators turned their attention to the real egregious violators of common decency, non-profit managers! (Hmmm. . . "non-profit"? Sounds like a commie plot to me! [a-HOOG, hawk, spit!])
In principle, we agree that non-profit organizations should expend the bulk of their revenues on programs and services consistent with their mission statements, and that exorbitant paydays for chief executives at these organizations are unseemly. When one looks at the straw men set up by lawmakers to argue against these "exorbitant paydays," though, one's bile-meter creeps upward.
Consider that the whipping boy (or girl) for those who would rein in egregious violations of NPOs' fiduciary responsibilities is Ms. Roxanne Spilett, chief executiveof the Boys and Girls Clubs of America, who received total compensation of nearly $1 million in 2008 (about half of which was retirement and other benefits). "'A nearly $1 million salary and benefit package for a nonprofit executive is not only questionable on its face but also raises questions about how the organization manages its finances in other areas,' said Senator Tom Coburn, Republican of Oklahoma."
Sure, a million-dollar salary sounds huge--OK, it is huge--but let's put it in perspective, as Senator Coburn suggests. One of the major responsibilities--if not the main responsibility--of a non-profit manager is to ensure that the organization is able to maintain operations. It is thus reasonable to measure a manager's success based at least partly on the revenue he or she helps generate. According to the Boys and Girls Clubs annual report, the organization took in revenue of over $127 million in 2008. Thus, Ms. Spillett's total compensation comes to about 0.8% of revenue--or 0.4% if we look only at her salary.
To put this in perspective, in 2007 Lloyd Blankfein, the CEO of Goldman Sachs, received a salary equal to about 0.6% of that firm's net revenues. Granted, this is net revenue, while the figure we quoted for Ms. Spillett is a percentage of total revenue. At the same time, though, since a non-profit organization is not supposed to maximize net revenue (another word for which is "profit"), we think the comparison is apt. Furthermore, it shows that Spillett's compensation is well within the range of what may be considered appropriate compensation for a manager of a large organization. (OK, her total compensation may be slightly higher as a percentage of revenues than a Wall Street Master of the Universe; in fairness, though, she probably didn't play as big a role in demolishing the global economy as Blankfein, either.)
One more thing: When Roxanne Spillett heard she was being singled out by Congress, here was her response:
In principle, we agree that non-profit organizations should expend the bulk of their revenues on programs and services consistent with their mission statements, and that exorbitant paydays for chief executives at these organizations are unseemly. When one looks at the straw men set up by lawmakers to argue against these "exorbitant paydays," though, one's bile-meter creeps upward.
Consider that the whipping boy (or girl) for those who would rein in egregious violations of NPOs' fiduciary responsibilities is Ms. Roxanne Spilett, chief executiveof the Boys and Girls Clubs of America, who received total compensation of nearly $1 million in 2008 (about half of which was retirement and other benefits). "'A nearly $1 million salary and benefit package for a nonprofit executive is not only questionable on its face but also raises questions about how the organization manages its finances in other areas,' said Senator Tom Coburn, Republican of Oklahoma."
Sure, a million-dollar salary sounds huge--OK, it is huge--but let's put it in perspective, as Senator Coburn suggests. One of the major responsibilities--if not the main responsibility--of a non-profit manager is to ensure that the organization is able to maintain operations. It is thus reasonable to measure a manager's success based at least partly on the revenue he or she helps generate. According to the Boys and Girls Clubs annual report, the organization took in revenue of over $127 million in 2008. Thus, Ms. Spillett's total compensation comes to about 0.8% of revenue--or 0.4% if we look only at her salary.
To put this in perspective, in 2007 Lloyd Blankfein, the CEO of Goldman Sachs, received a salary equal to about 0.6% of that firm's net revenues. Granted, this is net revenue, while the figure we quoted for Ms. Spillett is a percentage of total revenue. At the same time, though, since a non-profit organization is not supposed to maximize net revenue (another word for which is "profit"), we think the comparison is apt. Furthermore, it shows that Spillett's compensation is well within the range of what may be considered appropriate compensation for a manager of a large organization. (OK, her total compensation may be slightly higher as a percentage of revenues than a Wall Street Master of the Universe; in fairness, though, she probably didn't play as big a role in demolishing the global economy as Blankfein, either.)
One more thing: When Roxanne Spillett heard she was being singled out by Congress, here was her response:
In an interview, Ms. Spillett, joined by Mr. Goings, choked up when she was asked what had happened the day the senators first raised the issue of her compensation. “I can’t talk about it,” she whispered, tears in her eyes.It's funny. We don't remember too many tears in the eyes of Blankfein and his ilk.
She said the day had been the worst she could remember. “I have worked in the organization for 32 years, and I’ve never been motivated by a dime, not for a single minute,” she said.
She said she had contacted board members and demanded that they stop putting money into her supplemental retirement plan, which gave the impression that she took home more than she actually did. “I said, “Forget it, take it away,’ ” Ms. Spillett said. “I cannot watch our movement get hurt by this. I don’t want it to hurt our ability to help kids.”
Mr. Goings said the board had reluctantly agreed. “We felt that would be sending a signal to these guys that we did something wrong — and we didn’t,” he said, referring to the senators. “We really pushed back, but Roxanne pushed harder.”
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