Nonprofit salaries

[Farang]

I'm researching a nonprofit and the founder/president make $85,000 per year. This for an organization with revenue and expenses each about $1 million per year. Then they keep about $250,000 as a general fund.

Just wanted to get some initial reaction before I researched what market rate is for the position. Feels like the guy is doing pretty well for himself in a major metro city. The charity is similar to goodwill in that it takes donations and resells them, sometimes to the government or other charities

 

[Ns1]

seems reasonable to me if it's his fulltime job.

 

[Farang]

seems reasonable to me if it's his fulltime job.

Yea, it's just the percentage that gets me. I mean his profit margin is basically that of a small business isn't it

 

[Ns1]

Yea, it's just the percentage that gets me. I mean his profit margin is basically that of a small business isn't it

Profit margin? What?

 

[Farang]

Profit margin? What?

He's running an organization that brings in $1m in revenue each year. His "profit" is $85,000 or 8.5%. What does a 7-11 store owner do? 10%?

 

[Ns1]

He's running an organization that brings in $1m in revenue each year. His "profit" is $85,000 or 8.5%. What does a 7-11 store owner do? 10%?

meh, I don't see it that way at all. He's paying himself 85k to run a nonprofit as a full time job. He could be getting paid 85k or more if he were working a private job (assumption).



While I get your point (his operating expenses is a ridiculous % of charitable contributions), it is what it is. This is why people should donate to places that have very low operating expenses.

 

[Farang]

meh, I don't see it that way at all. He's paying himself 85k to run a nonprofit as a full time job. He could be getting paid 85k or more if he were working a private job (assumption).



While I get your point (his operating expenses is a ridiculous % of charitable contributions), it is what it is. This is why people should donate to places that have very low operating expenses.

Well I was working on a profile of them that I more or less expected to be a puff piece but am wondering if I should be critical of this. I guess I'll talk to some other nonprofits and get their idea

 

[Ns1]

Well I was working on a profile of them that I more or less expected to be a puff piece but am wondering if I should be critical of this. I guess I'll talk to some other nonprofits and get their idea

random googling says

Potential donors who are suspicious of how charity dollars are allocated often focus on the wrong villain, albeit a very prominent one: The handsomely paid charity CEO. According to Charity Navigator, the overpaid CEO is a minority, and the average compensation is about $150K.

However, leadership compensations that have raised controversies on the Charity Navigator website include major names like the American Cancer Society, which inspired 81 donor comments, overwhelmingly critical of the Deputy CEO’s $1,027,306 compensation, as well as Save the Children ($365,130) Susan G. Komen For the Cure ($531,924), Boys & Girls Club of America ($593,926) and the American Heart Association ($1,089,331). The USO’s CEO pulls down $435,762 annually—as one commenter posited, those earnings are comparable to what the President of the United States earns. Commenter John Robinson put it succinctly on the USO’s profile: “After seeing their salaries, their request just went in the garbage.” And Mr. Robinson is not the only one reporting that they decided against donating. Also in that same forum, others complain about the unnecessary cost of gifts and postage-stamped envelopes enclosed in charities’ mailed appeals.

http://www.cnbc.com/id/40592354/Where_Are_Your_Charity_Dollars_Going

I'm sure some powergoogling will lead to a million hits. Please update this thread with your findings!

 

[Farang]

random googling says



http://www.cnbc.com/id/40592354/Where_Are_Your_Charity_Dollars_Going

I'm sure some powergoogling will lead to a million hits. Please update this thread with your findings!

Thanks for the link

I think it's important to find comparable charities, after all this isn't the Red Cross. I'm reading about IRS rules and while they aren't set in stone, they will use comparable local charities to make a comparison of leadership pay.

 

[sdifox]

I'm researching a nonprofit and the founder/president make $85,000 per year. This for an organization with revenue and expenses each about $1 million per year. Then they keep about $250,000 as a general fund.

Just wanted to get some initial reaction before I researched what market rate is for the position. Feels like the guy is doing pretty well for himself in a major metro city. The charity is similar to goodwill in that it takes donations and resells them, sometimes to the government or other charities

Outrage not found. That is not a lot.

 

[Farang]

Some quick notes, I guess it's somewhat in line with market rate.

Salary on Yearly Revenue

Charity A Executive Director: 42,247 (2011) on 362,768 (2011)
Charity B Executive Director 121,023+33996(other/related 2011) on 33,416,438
Charity C – Executive Director 154,986 on 860,933 ($20m fund)
Charity D – Executive Director 103,387 on 4,338,892

 

[silverpig]

Some quick notes, I guess it's somewhat in line with market rate.

Salary on Yearly Revenue

Charity A Executive Director: 42,247 (2011) on 362,768 (2011)
Charity B Executive Director 121,023+33996(other/related 2011) on 33,416,438
Charity C – Executive Director 154,986 on 860,933 ($20m fund)
Charity D – Executive Director 103,387 on 4,338,892

A better way to go might be salary on total organization size. You're essentially paying someone to manage some sort of operations. Paying someone $50k to run a 500 person organization is stupid, even if it's a charity. You won't be able to get anyone with the right experience or skill to do that effectively.

People put too much emphasis on cost ratios for charities. It's not necessarily a good metric to use.

 

[Farang]

A better way to go might be salary on total organization size. You're essentially paying someone to manage some sort of operations. Paying someone $50k to run a 500 person organization is stupid, even if it's a charity. You won't be able to get anyone with the right experience or skill to do that effectively.

People put too much emphasis on cost ratios for charities. It's not necessarily a good metric to use.

Thanks for the tip. Sort of noticed that with the trust fund charity.. the yearly revenue isn't much but the person is managing $20m.

In this case it's mostly a retail shop. A clerk here or there maybe but not much else

 

[Train]

He's running an organization that brings in $1m in revenue each year. His "profit" is $85,000 or 8.5%. What does a 7-11 store owner do? 10%?

Is his compensation tied to revenue? Me thinks not. I'm assuming that's a fixed salary amount. If donations fall off sharply next year to say, $500k, will you complain that the CEO's profit margin "doubled" to 17% ? That wouldn't make much sense.

People don't typically refer to salaries as "profit". After all, it's a "non profit" organization.

 

[DaveSimmons]

What would it cost to find someone with the same skills and experience to do the work? And do you know what it is that the job really requires? "CEO" in a small company can mean working long hours at multiple tasks (managing and doing grunt work), not sitting in a big office and smoking cigars.

Also factor in any expenses that aren't reimbursed, like travel, vehicle, clothing for black tie events, whatever.

 

[rdiver]

I'll chime in after working for a large nonprofit for about two and a half years.

Is his compensation tied to revenue? Me thinks not. I'm assuming that's a fixed salary amount. If donations fall off sharply next year to say, $500k, will you complain that the CEO's profit margin "doubled" to 17% ? That wouldn't make much sense.

People don't typically refer to salaries as "profit". After all, it's a "non profit" organization.

Salary is usually determined by the board of directors of the non profit. One of the executive directors biggest jobs is to balance the budget. So if revenues were off, he might propose to cut expenses in other areas (ex cutting store hours or selling the property) or the board might cut his salary. Which would probably lead to him leaving or getting fired come the end of the year.

On charity navigator they usually have a place for CEO compensation percentage. 7.5% would probably be on the high end. But if he is really the only executive, then his overall compensation compared to other non profits is actually really low. It'd be interesting to see what their other expenses are.

Do you have access to their tax returns?

What would it cost to find someone with the same skills and experience to do the work? And do you know what it is that the job really requires? "CEO" in a small company can mean working long hours at multiple tasks (managing and doing grunt work), not sitting in a big office and smoking cigars.

Also factor in any expenses that aren't reimbursed, like travel, vehicle, clothing for black tie events, whatever.

Exactly. He's probably putting in 60+ hours a week if he's the only executive. Between running the store, meetings with the community and donors, meetings with the board, he is probably running ragged.

Also, he most likely gets reimbursed for mileage and business related expenses. My monthly expense check ranged from $500 to $1000 month based on mileage and other expenses.

 

[silverpig]

Thanks for the tip. Sort of noticed that with the trust fund charity.. the yearly revenue isn't much but the person is managing $20m.

In this case it's mostly a retail shop. A clerk here or there maybe but not much else

I've done some work analyzing charities and non-profits for impact studies. Some of the best ones have what appear to be terrible expense ratios, but it's because they act as multipliers. They don't do much work to help homeless people themselves, but they enable others to do a lot.

Some of the charities that have the least impact have a leverage ratio of close to 1 - you give them a dollar and they buy $0.95 worth of soup and feed it to a homeless person. Why do you bother to give the money to the intermediary?

If you can donate the $1 to pay the salary of someone who helps create effective charities, and one of those charities teaches life skills to at-risk youth, thereby preventing homelessness, your money hasn't gone to help anyone who was homeless, but you'll have reduced the need for 30 years worth of soup to feed the guy later in life.

People need to look at the impact charities have and the results they produce as opposed to how much of their money flows through to someone else.

I'm not a huge fan of giving a charity money so they can give it to someone else. I'm more a fan of giving a charity money so they can employ a talented person to do great things.

 

[Farang]

I've done some work analyzing charities and non-profits for impact studies. Some of the best ones have what appear to be terrible expense ratios, but it's because they act as multipliers. They don't do much work to help homeless people themselves, but they enable others to do a lot.

Some of the charities that have the least impact have a leverage ratio of close to 1 - you give them a dollar and they buy $0.95 worth of soup and feed it to a homeless person. Why do you bother to give the money to the intermediary?

If you can donate the $1 to pay the salary of someone who helps create effective charities, and one of those charities teaches life skills to at-risk youth, thereby preventing homelessness, your money hasn't gone to help anyone who was homeless, but you'll have reduced the need for 30 years worth of soup to feed the guy later in life.

People need to look at the impact charities have and the results they produce as opposed to how much of their money flows through to someone else.

I'm not a huge fan of giving a charity money so they can give it to someone else. I'm more a fan of giving a charity money so they can employ a talented person to do great things.

I suppose charities need to be sustainable and that requires an income stream so it shouldn't be surprising if sometimes they end up looking just like a business. Basically this charity takes donations and sells them to other charities and NGOs and government (they also operate grant programs where products are directly donated). So it's hard to see how they are a nonprofit as opposed to simply in the nonprofit industry. If I run a retail operation with revenues of $1m I guess I'd expect to make around $85k/year. Even easier when people are donating your product.

When I meet with them one thing I want to dig in to is what percentage of their products get donated through their grant programs versus sold through their retail. Their retail doesn't seem that price competitive

 

[Vdubchaos]

I'm researching a nonprofit and the founder/president make $85,000 per year. This for an organization with revenue and expenses each about $1 million per year. Then they keep about $250,000 as a general fund.

Just wanted to get some initial reaction before I researched what market rate is for the position. Feels like the guy is doing pretty well for himself in a major metro city. The charity is similar to goodwill in that it takes donations and resells them, sometimes to the government or other charities

Many None Profit/donation type places CEOs make well over $500k a year. Most take 80-90 cents on the dollar and some take 10-20 cents.

At the end of the day these places are BUSINESSES. Although they do help in some way or form, they also make money for themselves.

There is a place I used to go buy every day called Ameri something, they had a HUGE ware house building which always looked empty. My job donates 15k to them after 9/11 and few of us went to visit them. Brand new office furniture, chairs we have never seen before, top of the line computers.....very nice cars in the parking lot (better than cars in the parking lot of the place I worked at at the time.....a lawfirm).

There is # of websites that tell you just about everything you want to know about these organizations (I don't remember what they are/search).

Remember just because charity doesn't make profit, it doesn't mean that they take SHITLOAD of money as a bonus/perk etc. They can do WHAT they want when they want.

Here is some links I found:
http://www.cnbc.com/id/100271511/Highest_Paid_Charity_CEOs
http://www.bloomberg.com/news/2012-...ay-topping-1-million-rises-with-scrutiny.html
http://work.chron.com/comparison-charities-ceo-salaries-3358.html
http://voices.yahoo.com/charity-ceo-salaries-jobs-pay-over-500k-year-5827054.html?cat=31

Basically, if I give my money away I make sure it goes right to the source vs the middle man like ANY charity.

 

[Jeffg010]

Remember just because charity doesn't make profit, it doesn't mean that they take SHITLOAD of money as a bonus/perk etc. They can do WHAT they want when they want.

By law they have to prove they used 15% of the money for the charity and not just pocket all the money. So they can keep 85% of the money as long as they make all the records public. It was a Supreme Court Ruling.

http://www.charitywatch.org/articles/vietnow.html
"Madigan v. Telemarketing Associates, it is okay if fundraisers keep nearly all the money raised as long as they don't falsely claim that a larger portion of contributions is going to the charity. So fundraisers can avoid getting into trouble with the law by not stating what portion of a donor's money goes to the charity."

 

[Vdubchaos]

By law they have to prove they used 15% of the money for the charity and not just pocket all the money. So they can keep 85% of the money as long as they make all the records public. It was a Supreme Court Ruling.

http://www.charitywatch.org/articles/vietnow.html
"Madigan v. Telemarketing Associates, it is okay if fundraisers keep nearly all the money raised as long as they don't falsely claim that a larger portion of contributions is going to the charity. So fundraisers can avoid getting into trouble with the law by not stating what portion of a donor's money goes to the charity."

That's fine, so basically they make A LOT and help/give VERY little.

 

[Genx87]

He's running an organization that brings in $1m in revenue each year. His "profit" is $85,000 or 8.5%. What does a 7-11 store owner do? 10%?

Probably closer to 3-4%.

 

[Jeffg010]

That's fine, so basically they make A LOT and help/give VERY little.

This is why you have to research them to see which ones do and which ones don't. They are not all shady if that is what you think.

 

[Vdubchaos]

This is why you have to research them to see which ones do and which ones don't. They are not all shady if that is what you think.

Even if they keep only 10c on the dollar, to me it's shady regardless.

I also don't believe in "throwing money at the problem" in most cases the problem becomes bigger. Take a look at the countries US gives cash too (billions to be exact). This money never even remotely reaches the intended target/issue.

These companies do not have ANY incentive to completely resolve the issue/make it none existent either. The bigger the issue, the more widespread/known it is...the more money they get.

To me they are all a scam and don't really put a dent in any of the issues this world has. They make money on people's misery/misfortune and help those in need very little.

But I guess one can say something is better than nothing, I just don;t like to see MOST of what people donate go into thin air and the truth is, most of it does.

 

[Jeffg010]

Even if they keep only 10c on the dollar, to me it's shady regardless.

I also don't believe in "throwing money at the problem" in most cases the problem becomes bigger. Take a look at the countries US gives cash too (billions to be exact). This money never even remotely reaches the intended target/issue.

These companies do not have ANY incentive to completely resolve the issue/make it none existent either. The bigger the issue, the more widespread/known it is...the more money they get.

To me they are all a scam and don't really put a dent in any of the issues this world has. They make money on people's misery/misfortune and help those in need very little.

But I guess one can say something is better than nothing, I just don;t like to see MOST of what people donate go into thin air and the truth is, most of it does.

You better stop paying taxes then since you are "throwing money at the problem".