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Non-Profit CEO Salaries – should they be reduced

September 29th, 2009

Richard Marker

The Chronicle of Philanthropy, the unofficial bible of our field, has released its survey of non-profit CEO salaries at the largest non-profit organizations in the United States. It revealed that there was a median growth of 7% – despite a general reduction of non-profit budgets and a massive slowdown in the economy in general.

The survey also listed a significant number of ceo’s who, voluntarily or otherwise, took a reduction in pay of some sort. Implicit in the article was a sense of surprise that the median increases were so high and the number who took reductions so low.

My own response is that such surveys distort the real discussion about non-profit salaries in general, and about the salaries of ceo’s at the overwhelming number of non-profits most of whom can only dream about the budget challenges of these large organizations and foundations. Boards of directors, or the ED’s themselves of the many thousands of smaller non profits, by far the majority, may feel that they need to follow the lead of the “big boys” and reduce staff salaries as well. After all, in times like these, with stretched and fragile budgets, isn’t it appropriate to show fiscal discipline by demonstrating that they too are setting the right example?

But there is a vast difference between a ceo making $1/2 million each year and one making $75,000. It isn’t for me to arbitrate what a living wage for ceo’s should be, but realistically a 10% cut in a $500,000 salary impacts lifestyle, while a 10% cut in a $75,000 budget can impact viability.

What is more, salaries below the top executive level are, by definition, lower. In so many not for profit organizations, the salaries of those on the front lines are already at a very fragile level, and too often the benefits are token at best. If we put pressure on the salary of the top executives, how will we maintain the levels of those whose salaries are but a fraction of their bosses?

It is fair to acknowledge that numerous senior executives have volunteered to reduce their own salaries in order to preserve positions or forego salary reductions among their staffs. Such leaders are to be praised and applauded. But, in my experience, with salary lines being the largest line in many non profit budgets, there is great pressure to balance budgets on the backs of overworked and underpaid staff. It is a hard and delicate issue.

But when one looks at the salaries of only the largest of their kind, as the Chronicle did, it inadvertently allows too many to overlook the real and continuing challenge to the voluntary sector – enabling those providing their services to do so at a living wage, with dignity and pride. Most non-profit executives are not overpaid; most of their staffs are underpaid. Even – or especially – in these economic times, let’s not forget that.

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