I was involved in a project recently with a group of business people who were not overly familiar with the nonprofit sector. The project was to identify a nonprofit that was well run and employed what the group perceived were best practices. Nonprofits had submitted many documents to help the group make their decision.
What I found interesting in this group is what they thought was most important. The two things of most interest to the group of (for profit) business people were CEO salary and the administrative cost. In this process the administrative cost was determined purely as a percentage without consideration of each nonprofit’s particular situation.
One nonprofit was excluded solely because the CEO’s salary had just slipped into six figures. This CEO had served for 25 years in that position and had consistently grown the organization. Many other organizations were excluded solely based on a subjective observation that their overhead was “too high”. “Too high” was never quantified. I know this is appalling for those of us who understand what it takes to run and grow a nonprofit organization with excellence.
Then, recently, I was in a meeting with nonprofit CEOs. The first topic that was mentioned is how the nonprofit sector could work on changing the public perception about nonprofit CEO salaries.
It is surely not an easy task. I recommend the book Uncharitable by Dan Pallotta for a very insightful description of the puritanical beginnings of the nonprofit sector. Because of this history, the public perception is that nonprofit staff make a choice to work for less and that because it is a charitable organization, employees don’t deserve pay that is comparable to the for profit sector.
This view holds communities back. The nonprofit sector is a powerful business force in most communities. Not only as an employer but as a purchaser of products. Growing our sector supports communities economically and socially. To grow the sector and its impact, talented people are needed. Talented people will stay in their jobs when they derive satisfaction and are fairly compensated.
It is good business sense for our communities to pay our nonprofit leaders a salary that is commensurate with their performance. It is the leader of a business (for profit or not for profit) who makes things happen. It is the leader who is accountable. It is the leader who performs his or her role with excellence who should be appropriately compensated. Leaders in the nonprofit sector accept their positions because of the challenge, because they care to make a difference, and because they want to run businesses that grow and thrive.
It is a mistaken notion that nonprofit CEOs should receive limited pay. If the public believed this about for profit businesses, our economy would be in worse shape than it is now. Leaders deserve fair and appropriate compensation commensurate with their performance. Spread the word.