Life at the Bottom

Posted by Laura Otten, Ph.D., Director on October 7th, 2011 in Articles, Thoughts & Commentary

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Does the nonprofit sector have a mind of its own; or a backbone? Consider the 9/22/11 issue  of The Chronicle of Philanthropy.  This issue was consumed with exposing—and it did feel like a tabloid expose–the data on high salaries for nonprofit leaders.

In so doing, it helped do the homework for those attorneys general around the country who want to “do something about exorbitant salaries” for nonprofit executive directors.  In so doing, it pandered to the concerns of these attorneys general, the media and the donors who are easily swayed by scare headlines on excessive pay.  In so doing, it focused on the for-profit way of assessing everything:  dollars.  And in so doing, it buried on the back pages—page 21, to be specific– almost as a story after-thought, the far more disturbing revelation of the various studies of nonprofit salaries.

Dollars and cents are an important part of a nonprofit; but dollars and cents without knowing the social value and contributions of a nonprofit are totally meaningless.  Yet, with one exception, I didn’t see any of that; I just saw numbers.  There was, for example, the front page headline that read “Modest Raises Ahead Seen for Many CEO’s (sic) as Economy Staggers.”  Ironically, though, it was juxtaposed to a picture of the CEO of the American Red Cross, with a caption indicating that her salary hadn’t moved since she took the job in 2008–$500,000.  And, it noted in the same caption, she had turned down bonuses in both 2009 and 2010.  Good for you, Gail McGovern!  A box blared the median (meaning half are above and half below) salary+bonus combination for nonprofit CEOs was $387,000 in 2010.

In nothing I read was there a mention as to what is happening to the compensation for the rest of the workers at these nonprofits, the ones who make the CEOs look good.  They, I guess, are truly just chopped liver.  Infuriating!

The one exception that I mentioned above was in reference to the compensation of Steven Altschuler, CEO of Children’s Hospital of Philadelphia, who, in 2009, earned $948,293 in salary and the exact same amount as a bonus.  On top of that, he earned $2 million in benefits, including some “deferred compensation” (are you kidding me?) that had accrued over five years.  The Board cited Dr. Altschuler’s exceptional performance as reason for his compensation and the growth the hospital has experienced under his leadership.  And let’s be honest:  CHOP is one of the best children’s hospitals in the country, ranked as either number one or two in eight out of the 10 specialty areas according to US News’ report, Best Children’s Hospitals 2011-2012.  In addition, I’m told it is one of the two most sought-after locations for a pediatric residency.

Do you think there is a connection between the salaries these people receive and the fact that almost to a person their titles are CEO or President?  Very few with the title Executive Director made it on the high salary rolls.  I guess those who have a corporate culture title think it entitles them to corporate culture salaries, despite the fact that regardless of what you call it, a rose is a rose is a rose.  The top of the paid portion of the organizational chart must do the same work for the organization to remain successful and sustainable, regardless of title.

As to the truly scandalous, yet buried story in the Chronicle, is the fact that according to a 2009 Guidestar study of over 130,000 individual jobs at more than 87,000, female CEOs’ salaries still fell far below those of male CEOs.  The last round of the women’s movement launched almost 50 years (1963) ago;  Ms. magazine will celebrate its 40th anniversary next year.  What is going on?  The sector that is supposed to be the voice of social justice, the source of caring and nurturing for those less fortunate (a relative term) and charged with enriching the lives of individuals and communities sill is not paying equal wage for equal work.  What gives with that?

In 2009, female heads of nonprofits with annual budgets in excess of $50 million was 26.4% LOWER than those of their male peers.  So, to all of you who were ready to pounce and say size was the differential—more males head the largest nonprofits, so of course there is going to be a salary difference—find another argument.  At organizations with budgets of $250,000-$500,000, females “only” earned 13.4% less than their male peers.  The study points out that these differentials improved since 1999:  back then, female heads of nonprofits earned a whopping 55% less than males, while the heads of the small organizations received 18% less.  Somehow, I just am not mollified.  That there is any differentiation of the current magnitude, one that cannot be explained solely by differences in education, past experience or overall qualifications, is a disgrace and one that should be rectified immediately by any nonprofit that truly works on behalf of the public good.

And as much as all of this absolutely infuriates me, there is a far more important story on nonprofit wages that is never covered, never talked about in public, never highlighted:  the story of the pitiful salaries of those at the bottom of the organizational chart.  The salaries of those players without whom the highly compensated executive—male or female–could not possibly be successful.  Who is monitoring that?  Who is agitating to redress that?


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