Cap executive comp: blizzard of controversy on executive buy-outs.

The American Red Cross has handed over documents demanded by the Senate Finance Committee relating to its business and personnel dealings and the information is nothing less than stunning. While NPT reporters are examining the documents for stories for this and future issues, one item jumped out. The severance packages given to the past two presidents, who were terminated by the board, totaled $2.68 million.

That's right. A charity paid $2.68 million to make two executives go away. How do you explain that to donors? The Red Cross can't make the argument that you need to pay high salaries to attract the most qualified executives. Whether or not Dr. Bernadine Healy and Marty Evans were the best chief executives is no longer the question. The board very quickly decided that they were not right for the Red Cross.

Let's put this in a little perspective here. While Hurricane Katrina victims were being tossed from the apartments and hotels to which they had been evacuated because federal money had run out, the Red Cross was filling a moving van with cash for the former chief executive.

The Red Cross gave Katrina victims debit cards ranging from $360 to $1,500 depending on the size of the family unit. The average was $1,000. Some 2,780 families could have received double from donors if the ARC didn't pay out $2.68 million to just two already wealthy individuals.

Let's go one more step. Let's say a family of four can rent a house in Houston for $1,000 per month. Let's say it's another $5,000 for some basic furniture and $1,000 per month for food and utilities. The family is expected to find work and take over the bills in six months. That adds up to $17,000. If you do that math through, that's 157 families that could have been set up nicely on what just two executives were paid to go away.

That's just the tip of the iceberg. The Red Cross is legendary for its golden parachutes for senior staff. The Red Cross has had two presidents and four interim presidents in the past six years. Each time there was a house-cleaning. If those costs are not in the documents given to Sen. Charles Grassley and his Senate Finance Committee, he should ask for them.

There needs to be a cap on compensation of charities' executives. The sector's leadership has brought it on themselves. If an association of dues-paying members wants to pay an executive director $500,000, that's fine. But a charity that solicits funds from the public should cap the top salary at $250,000 with a 10 percent, one-year buyout.

The sector is full of brilliant, talented people willing to work for a quarter of a million dollars or less.

Ethical issues

WWDD. Those four simple letters ask a big question. They stand for "What Would Don Do?" The first "D" could be any letter that begins a person's name.

The Don in this question is Don Kuhn. Lapel buttons with Don's picture and those letters beneath it were handed out at the Willard Hotel in Washington, D.C., back in February. Don died recently at age 83 and the event at the high-brow Willard was in his honor. He was a guru to many in the direct response fund- raising business. He was legendary for putting the client first and acting in the most ethical manner.

The ethics of taking certain charitable gifts was the focus of a conversation string recently on a listserv. The debate regarding whether or not a gift should be declined showed that good, honest people can have a disagreement regarding how to handle a situation.

Meanwhile, in Washington, D.C., a roundtable discussion was held with members of Congress and the American Red Cross. The elected officials have been wrongly questioning the organization's ethical behavior when it comes to handing donor money in the face of disaster relief.

And, of course, the issues of governance and ethical practice have been at the forefront of Independent Sector's push with its Panel on the Nonprofit Sector.

Seeing all of the chatter on C-SPAN and in consumer media outlets regarding how the nonprofit world spins is a doubled-edged sword. Yes, donors should be interested in the practices of organizations that they support. And, there must always be constructive discussion regarding policies and practice.

The negative connotation between discussion and finger-pointing does damage to the sector. If donor funds were misused, then prosecutors should get involved. Otherwise, it's best to keep a civil tongue while discussing honest disagreements in practice.

Just about everyone has a mentor, whether or not that person or persons carry that semi-official title. Roughly 150 years ago, when I was a young reporter in Fort Worth, one of the authors of that ethics conversation on the listserv was an assistant metro editor. He taught. OK, he occasionally yelled. Years later we are both in the nonprofit world, me here at the NPT and he at a national charity.

It's not unusual to think back to those days and consider how he would have handled something editorially. But by now, the practice is second nature.

We have all been touched by someone who knows better than us. During the next quandary, think of that person and ask WW?D? It's a test to see if you would have done the same thing. If you'd like to contribute to a scholarship fund set up in Don's memory, make the check out to the DMEF Dan Kuhn Fund. The address is 1120 Avenue of the Americas, N.Y., N.Y. 10036.