The New York Times published a lengthy article today about Philip and Joel Levy, brothers from Brooklyn who until recently held the top positions at the Young Adult Institute Network, a giant non-profit organization that provides services and runs group homes for developmentally disabled people in New York. From the tone of the article and its headline, "Reaping Millions in Nonprofit Care for Disabled," one can assume readers are meant to feel indignant at the generous salaries and benefits received by the Levys, financed largely by Medicaid money. Indeed, should there be any doubt, note that the article is part of series about malfeasance among providers of services for the disabled--a series with the eye-catching title, "Abused and Used."
Certainly one of the most noble and vital services the news industry provides is shining a light on corruption and the misuse of public funds. As we read this article, though, we felt a bit "abused and used" ourselves. Specifically, we felt that the Levy brothers hardly embody the sort of massive corruption that merits a front-page expose on the paper of record.
The charges of financial impropriety mainly arise from some questionable--though hardly egregious--expenditures by the Young Adult Institute. For starters, the Levys were paid quite well: Each earned close to $1 million a year. This compares quite favorably with executives of "similar-sized non-profit groups in New York," who earn, according to the article, an average salary of close to $500,000. We'll take the Times' word for it about the $500,000 average salary of other non-profit CEO's--although the article doesn't specify what "similar-sized non-profits" means. On the face of it, though, a $1,000,000 annual salary for the chief executives of "the largest operator of group homes" in New York, whose services also include "day programs, a school, dental care, and transportation for the developmentally disabled" doesn't seem particularly out of line. Other questionable expenses included the use of agency funds to pay for college tuition for executives' children, car allowances, hotel expenditures for fund-raising trips, and a $50,000 charge to help Philip Levy's daughter purchase a Greenwich Village apartment while she was in graduate school.
Outrageous? Maybe. As the article points out, though, all of these charges were approved by the non-profit organization's board. Furthermore, with the exception of the $50,000 gift to Levy's daughter, all of these expenditures sound unspectacular when considered as compensation for chief executives of a multi-billion dollar corporation, non-profit or not. As citizens, we should scrutinize the use of taxpayer dollars, but we should not be so quick to condemn out of hand large sums of money just because they seem, to us, "large."
Could the YAI board have paid the Levy brothers less? Sure. But how much less? These are skillful executives. One point the article makes is that, while YAI executives are highly compensated, they also provide exemplary services: "The organization and the Levys have earned many admirers in the field for the quality and range of their programs." A parent of a YAI resident "said the organization excelled at hiring caring people, investing in training and supervising programs." As any executive compensation expert will attest, to attract talented people, you must provide attractive compensation, which may well include a high salary and/or benefits like tuition reimbursement.
Maybe the Levys would have done the same job for less money. Maybe when the board replaces the Levys (who have retired), equally skilled executives will be found who will work for less. We wish the board luck. Still, in an era when bank executives receive multi-million dollar bonuses for running their companies into the ground and decimating the lives and livelihoods of average Americans, we find it hard to begrudge a generous compensation for a couple of guys who have devoted 40 years of their lives to helping the most defenseless members of society and who have apparently done a pretty good job of it.
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