N.Y. Organization That Sparked Review of Nonprofit Pay Begins to Reform Itself

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September 12, 2011; Source: Crain’s New York Business | Young Adult Institute (YAI), the large state-funded organization in New York State that serves adults with developmental disabilities, was taken to the public woodshed last month regarding its outlandish executive compensation packages, among other problems. A New York Times investigation found that brothers Philip and Joel Levy, who had led YAI since the 1970s, were each being paid just under $1 million per year. In addition, the Levys billed taxpayers for luxury cars and the costs of their children’s college education and living expenses. The story was followed quickly by a declaration by Governor Andrew Cuomo that he was authorizing a review of executive pay at all nonprofits that receive state Medicaid funds. NPQ took the position at that time that such a review should be focused not only on nonprofits but also for-profit vendors serving poor and vulnerable people.

Now YAI, which runs 450 programs serving 20,000 people a year, has come forward to announce the steps it is taking to reform its faulty governance system. Among other changes, approximately half of the 19 trustees on the board will be replaced within the next year, and the replacements will include representatives of the developmental disability community. The compensation and pension committees will be completely reconstituted by the end of the year. Additionally, the pay of the chief executive will be keyed to the 50th instead of the 75th percentile among a peer group of executives, and the bonus system has been overhauled.

In a September 7 letter to the acting deputy commissioner of the New York Office for People with Developmental Differences, YAI Board Chair Eliot Green said, “It has been a painful time as YAI has dealt successively with the fallout from the recent government investigation and settlement, followed by critical articles in the press and the understandable concerns of [state] officials…We are not wasting a moment by being defensive or rehashing the past.” What do you think of the steps YAI has taken to deal with the fallout of this scandal?—Ruth McCambridge