Pay Here,” by Terry Freedman

July 22, 2018; Crain’s Detroit Business

Detroit’s hiring market for nonprofit executives is following national trends. Increased CEO turnover, increased competition for qualified leaders, and nonprofit boards’ increased comfort with their organizations’ resources have resulted in higher nonprofit CEO pay.

Detroit area CEO median pay increases for the highest-paid executives reached 4.6 percent in 2016, according to an annual survey performed by Crain’s Detroit Business. (This same survey, by the way, produced the start of the publication’s closer look at Charity Motors, as one of the organizations named.) Since the first survey in 2016, Crain’s reports median annual salary increases between 3 percent and 4.5 percent. GuideStar’s 2017 Nonprofit Compensation Report said “Pay increases for nonprofit CEOs and executive directors at some large nonprofits topped 4 percent nationally in 2015 for the first time since before the recession. Median pay increase for nonprofit CEOs nationally that year were 3 percent, up from 2.6 percent in 2014 and 1.6 percent in 2010.

Turnover is a significant driver of compensation. Ten out of 57 Southeast Michigan CEOs identified in last year’s annual report have since left their positions. Ed Steinhoff, Ann Arbor-based managing director at Pearl Meyer & Partners LLC, said, “We are seeing a lot more turnover in (nonprofit) executive positions than we have had in the past. It kind of goes along with a stronger economy. There are a lot more opportunities, [so] people are more likely to jump.”

One trend common to nonprofit CEO compensation is the inverse relationship of compensation with tenure. Newer CEOs often are paid better than long-serving CEOs. This becomes a problem as retirement looms. Paul Creasy, partner, Avon, Ohio-based Organizational Consulting Group LLC, said, “They buried themselves in their work and accomplishments…[but] within a few years of retirement, [they] are finding they don’t have much in the way of assets.”

Reflecting other studies such as CompassPoint’s “UnderDeveloped” 2013 national report on development directors, the Crain’s study indicates that a CEO with fund development experience is valued more highly than a CEO lacking such experience and expertise, often resulting in a 10 to 15 percent higher compensation package.

Regardless of where you are and how happy you are doing what you do, it’s a good thing to be aware of the employment and compensation trends in our field as you contemplate the next steps in your career. It’s also good information to share with board members.—Michael Wyland