March 16, 2017; ArtNet
NPQ presented a webinar with GuideStar’s Chuck McLean that identified for nonprofits some things on the Form 990 that might be considered “red flags” in the hands of reporters, donors, or regulators. McLean was careful to reiterate that the Form 990 is now super-accessible to all the preceding groups. When they read them, they’ll see a story in them, and if what those Form 990s suggest isn’t true, it’s best to use the Form 990 itself or the real estate GuideStar provides nearby to explain. Here’s a real-life situation that illustrates the problem.
As you may remember, Thomas Campbell, the director of the Metropolitan Museum of Art in New York City, recently resigned in one of those euphemistic “mutual agreement” moments. The stories that followed were built upon the organization’s financial straits more than anything else. But then, on March 13th, the New York Post reported that Daniel Weiss, who took up the title of president in 2015, received a $300,000 bonus for less than half a year on the job. His total compensation was $818,112, “which included a salary of $327,931 and a housing allowance for his Park Avenue apartment,” the Post wrote.
According to the Post, working from the organization’s Form 990, which was posted on GuideStar, Campbell’s total compensation in the same fiscal year was $1,428,935, with $942,287 of that being salary. He has been living in a four-bedroom, four-bath home paid for by the museum. Emily Rafferty, the former Met president who retired in June 2015, received compensation of $2.2 million. But these were not the only $1 million-plus salaries at the institution: Suzanne Brenner, senior vice president and chief investment officer, had total compensation of nearly $1.6 million, and chief investment officer Lauren Meserve received total compensation over $1.4 million. These numbers, reported the Post, were the results of increases and bonuses made relatively recently, so we can take these kinds of compensation packages into consideration when we consider that $8.3 million deficit.
Did those in charge realize the problem in the size of the payroll? It certainly looks that way; 34 employees were terminated this past September and another 50 staff members took buyouts. Still, the compensation of top staff is an undoubted embarrassment as the museum struggles to regain the confidence of all of its stakeholders, including staff. So, last week, the museum sent a note of explanation to its staff:
Last week, the Museum released its annual tax filing for FY 2016 (which runs from July 1, 2015 to June 30, 2016), which reflects compensation for calendar year 2015 (from January 1, 2015 to December 31, 2015). One part of this filing, which is known as a Form 990 and is required of all nonprofits, is the disclosure of executive compensation. This annual release of compensation information generates attention for many nonprofits, as it did for us in recent days. We wanted to provide some context to the filing.
All executive-level compensation at the Museum is reviewed by an independent, third-party compensation consultant to ensure it is reasonable and in line with compensation for leadership at comparable institutions. The release of the Form 990 for 2016, notably, significantly lags in time from the period it covers. Our release last week covers executive compensation for calendar year 2015. It was after this time period, in the spring of 2016, that we found it necessary to impose significant cost-cutting. At that time, voluntary pay cuts were taken by Tom Campbell, Dan Weiss, and other senior staff members. It is also important to note that the Form 990 is by nature a crude reporting instrument that, among other things, fails to specify what constitutes compensation under the “bonus” and “salary” categories. The Met and other institutions consider compensation documents to be confidential, so it is not appropriate for us to provide additional details; however, we hope this provides a bit of context for this information.
We don’t know if this communication was sufficient, but even if it’s not too little, it is certainly pretty late. For what it’s worth, we often find that whenever a third-party compensation consultant is cited, you can expect the pay to run higher than the norm.—Ruth McCambridge