Why Can’t They Be More Like Us?

Posted by Laura Otten, Ph.D., Director on February 13th, 2009 in Articles, Thoughts & Commentary

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Fat Cat

 Earlier this week local public radio’s Radio Times featured a columnist from the Philadelphia Business Journal and an editor and senior writer for Business Week.  The topic was the value, potency, impact, etc., of President Obama’s mandate of a cap on the compensation of senior executives at companies receiving federal bail out money. 

It took the first comment of one of the guests to have me fuming.  He was discussing how executive compensation consultants are already advising people on how to get around the cap!  (This point was affirmed by the second guest.)  As an example, apparently the cap is associated with job titles not salary.  So, compensation consultants (who, may I ask, is paying their hefty fees?) are apparently going to look at ways to re-title positions and avoid the $500,000 cap.  Apparently, it is just way too difficult to live in New York City on $500,000—especially if you need a nanny, and a large apartment, and private schools for your children.  (But, let’s be fair:  you’ve got a car, a plane, an entertainment budget, your taxes covered by an additional bonus your company gives you, etc.  A second house might be out of the question.  And, of course, you do have to go into work every day knowing the head of the company not having been bailed out by the government is making $30 million.  And I am only citing things I learned on this radio show.)

The whole time I am driving and listening to this, I’m thinking:  what is wrong with these people?  The average compensation “package” for a nonprofit executive director in the greater Philadelphia region was just over $94,000, when we did our Wage and Benefit Survey in 2005, with a range of just under $60,000 to just over $111,000.  And while we do grumble about making a livable wage, we also understand that our job isn’t about us but about serving our customer base.  And why should that be any different for us than for the CEO of a bank or an insurance company or an automobile company?  We understand that a huge part of our compensation comes from the very work that we do, the help we are bringing, the enrichment we are providing, the learnings we are sharing, etc., all for the benefit of our customer.  And why should we differ here from our for-profit peers?   We are not simply working a job; we are working for a purpose and doing so with a passion that sustains us in ways money—no matter how many zeros follow the first number—could.

The for-profit sector could learn another valuable lesson from us, as well.  For example, we understand completely the need to be respectful of the gifts we get from others, and to treat them appropriately.  We know that if we are not good stewards of those gifts, they will not be coming to us in the future.  We know that if we do not use them as the donor intended us to use them, we do not deserve to keep that money or receive a gift again.  (And here intent matters as much as explicit directions.)  We know that we cannot indulge ourselves with other people’s money, but must spend it wisely and carefully to the benefit of our stakeholders.  We know that it is not our money, but money that others have worked hard to earn and yet have decided to share it with us.  Thus, we must honor their wishes and do the good work we promise.

One of the mantras of the nonprofit sector for about the past 20 years has been that the nonprofit sector has to be more like the for-profit sector:  we have to become more business like, pay more attention to our bottom line, focus on outcomes, etc.  Perhaps it really is the other way around:  the for-profit sector needs to be more like the nonprofit sector. 

The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.

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