Can salaries be too high in the nonprofit sector?

Photo credit: astudio, Shutterstock
Photo credit: astudio, Shutterstock

We’ve discussed how many nonprofit employees are worried about their financial futures and monetary compensation while working in the sector. Meanwhile, there are nonprofit executives on the other end of the spectrum, making millions of dollars a year. The Huffington Post posted a list of the highest-paid nonprofit executives, including Laurance Hoagland Jr., the chief investment officer at the William and Flora Hewlett Foundation, and John Seffrin, the CEO of the American Cancer Society:

In 2010, one-third of nonprofits surveyed provided bonuses to their well-paid executives, and the median bonus was over $50,000. This year, top executives are expected to receive modest increases, from 2.5 to 3.5 percent. But when you’re making what the highest-paid executive on our list does—$2.5 million a year—that’s a decent raise. More than 20 nonprofit groups paid top executives more than $1 million a year in 2010 and 2011, according to [a September report from the Chronicle of Philanthropy].

Many people feel the funds donated to nonprofit organizations shouldn’t be used to provide such high salaries to their executives, while others see it as a price to pay to attract and retain the talent necessary to keep nonprofits thriving. What do you think?

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    • Jessica VM
    • April 10, 2013

    I believe in order to secure top talent in the nonprofit sector, wages need to be close and/or comparable to those in the for profit sector. Please see the TEDTalk by Dan Pallotta about the need to invest in “overhead” within the nonprofit sector.

      • Brenda A
      • April 10, 2013

      @ Jessica VM: Thank you for sharing that interesting, ‘eye-opener’ video! It definitely gave me food for thought on how we really view our charitable organizations. We must change our perspective of ‘overhead’ in the nonprofit sector. Again, thanks!

  1. If people are in the charity field to make very high salaries, similar to the profit sector, then they are not properly motivated for the job. After all, doesn’t the revenue come from people who are altruistically motivated? There is an inconsistency here that is glaring. If I know that a charity is paying the top executive > $200k I will not contribute to it.
    Besides, executive wages in the profit sector are the result of a conspiracy to escalate such wages that has been going on for 30 years or more.

      • Andrew
      • August 31, 2013

      While it is on some level disturbing that people would rather make money than help others, leading them to work in the profit sector, and equally disturbing that their wages are absurdly high, it’s important to remember their companies still make more money than nonprofit organizations. If a greedy CEO is making 500k at a nonprofit organization, but has done so by being a talented business person and creating a successful organization with higher amounts of donations than smaller companies with smaller overheads, they shouldn’t be immediately shunned – regardless of the CEO’s motives, they are making a difference through his charity, and the charitable impact is what matters most, not the CEO’s personality.

    • Gordon
    • April 12, 2013

    Whether looking at the for-profit sector or the non-profit sector, I believe the top executives of most organizations are overpaid, while front-line workers are vastly underpaid. In order to pay the massive salaries and bonuses demanded by top executives, enterprises have been forced to lay off front-line workers and require those who remain to continually take on added responsibilities. At the same time as front-line workers are burning themselves out trying to keep up with their ever-increasing work loads, their organizations are failing to give their increased productivity the recognition it deserves. Raises for front-line workers have not kept pace with inflation (in many cases salaries have even remained frozen), meaning that these workers are continually doing more with less and for less.

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