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Payroll Roulette: You have to pay to play. (Out on a Limb).

Have you ever walked into a financial services firm and asked to speak to the advisor who makes the least amount of money? While you're at it, demand to speak with the person who earns the least commissions.

That's exactly the mindset nonprofits have constantly sought to portray to the donor public year after year after year. This year's salary figures, published in last month's NPT, are startling not only in the modest amount paid to the chief executive of nonprofit organizations, but also that executive salaries are so disparate to the type of organization.

The data makes you scratch your head. Why should the CEO of a major health care institution generating $50 million in gifts make less than the CEO of an association with 90 percent less revenues and far fewer problems and challenges? A 900-member association CEO, for example, makes $30,000 a year more than a CEO of a health-related association that might have tens of thousands of members and 90 percent more in revenue.

The simple fact is that nonprofit executives are being asked to manage the resources of an organization based on a prismatic view. Shouldn't donors demand that the best, rather than the least, manage their gifts?

Most people you ask would want their hard-earned income that they invest to be managed by the most successful person who has a demonstrated track record and proven earnings history. It's hard to believe that donors and volunteers would assent to their stewardship of time and money by the least paid and motivated executives.

It is shameful that boards, whose membership is often comprised of supposed business leaders who have sales people who are often the highest paid executives in their companies, check their entrepreneurial brains at board meeting doors. They have myopic vision when it comes to hiring talent for their nonprofit organizations.

Instead, they try to secure the services of qualified executives, such as development or volunteer directors who raise the money and manage the resources for the organization, for the least amount of money. Yet, they desire the greatest amount of managerial talent. They know this inverse ratio doesn't work in the for-profit world, so why do they scratch their heads when they don't apply the same reasoning to their organizations.

Boards often demand pristine and almost insurmountable performance with less than desirable compensation packages and speculate why the money doesn't flow in. They seem to believe that rather than pay more, they will just keep hiring and firing until they find success, which often doesn't happen. And certainly, this is a practice they would not tolerate in their own performance-rewarded successful companies.

It would seem that boards have lost their way. Is it no wonder that recent headlines, including the cover of our last issue, show that turbulence at the top. Organizations, especially well-grounded board members who theoretically deal with the real world, look at their executive ranks among nonprofits with some sort of stigmatism.

If you took the revenues of many of the charities represented in our survey and put them into a ranking of top businesses in this country many of them would be at or near the top. An executive pay scale offered to executives of these for-profits is almost always two, three or four times more. For-profit boards that hire management demand performance and reward it. Why shouldn't nonprofit boards demand and compensate managers in the same way?

Fear of donor backlash could be a reason. After all, press reports almost always taint a nonprofit executive salary as somehow being obscene, regardless of the number. It's as if they shouldn't be paid at all. On the other hand, they ridicule nonprofits as being poorly managed.

Ironically, you do have nonprofit executives who make six figures who have no performance goals against which to measure results. Unlike the for-profit world, where share price and price per earnings rule the compensation formula, nonprofits have poorly defined tools through which board and donors can measure the success of their management.

It's almost laughable when you hear a famous radio personality, such as Don Imus of MSNBC's Imus in the Morning show or other pundits complaining frequently about nonprofit salaries. Don Imus' recent complaints about the salary of the American Red Cross president, who manages an organization with thousands of employees and more than $2 billion in annual revenues, unabashedly points Out that he only takes $1 in salary from the management of his non-profit children's ranch in New Mexico. He forgets to mention his own multi-million salary from his radio show. He probably wouldn't be as flip if his only source of income was from the ranch.

Too, another compunctious part of this year's salary survey is that one of the most important aspects of a nonprofit that make it richly unique in this modern world: the director of volunteers makes one third the salary of it's top officer. Volunteer managers that demand extraordinary recruitment and retention skill are paid one third of the person at the top. Yet, it is volunteers that often define an organization and the backbone of their service delivery.

You would have to be living on another planet not to appreciate the difficult challenge all organizations face each year in finding, motivating, training and keeping volunteers. Each year, the pool of volunteers dwindles at exactly the same time they are more urgently needed. Yet, the director of volunteers, who manage this critical function, is paid on the basis of ... what?

During the past five years the meter has scarcely moved in compensation, despite the fact that the urgent need to find and keep volunteers has literally gone off the scale. In fact, if you look at the title charts in our salary surveys, the director of volunteers is paid the least among ten positions we track. It is a sad commentary that the one of the only hallmarks that makes nonprofits such a unique enterprise in our country pay less to a position whose skill is greatest in demand.
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Article Details
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Author:McIlquham, John
Publication:The Non-profit Times
Geographic Code:1USA
Date:Mar 1, 2002
Previous Article:Federalizing compassion: Going down wrong volunteer track. (General Ramblings).
Next Article:Letters.

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