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January 20, 2020; Generocity

Generocity, a Philadelphia-focused publication, reports the average chief executive compensation at the 10 largest nonprofit organizations by gross receipts for each of six different budget categories.

Ranging from under $1 million for “grassroots” to $5 billion and above for “powerhouse,” the infographic sorts organizations by size, names organizations in the category, and lists the average chief executive salary, plus additional compensation if applicable.

The six nonprofit size categories, sorted by annual gross receipts, from a 2017 GuideStar blog post, are:

  1. Powerhouse: $5 billion and above
  2. Economic Engines: $50 million to $5 billion
  3. Large: $10 million to $50 million
  4. Mid-size: $5 million to $10 million
  5. Small: $1 million to $5 million
  6. Grassroots: Under $1 million

The article’s author calls the news “more conversation starter than report,” but, of course, the data are useful for those folks in nonprofits who are earning these salaries, and for nonprofit boards to assess whether their leadership is being compensated “in a way comparable to their peers.”

NPQ’s Martin Levine, writing about a study of American Jewish federations’ fiscal management practices, said high salaries are rationalized because “keeping successful staff justifies the cost.” The supply of talented executive managers is limited, leading to competition for talent. By contrast, stagnating wages means that frontline workers cannot rely on the “market” to boost their earnings. This is true for nonprofits as well as for-profit businesses, as the number of low-wage workers in the US has grown to 53 million, or 44 percent of all workers aged 18–64, according to a recent Brookings study.

As the nonprofit sector is also known to harbor “wage ghettos,” which NPQ has extensively covered, people are also interested in knowing whether non-executive staff receive fair compensation for the work they do. Generocity took up this angle in another article by Tony Abraham that they published in 2018, which urges a view of executive pay in relationship to line-staff pay. One wonders why we don’t ask how donors and supporters feel about “people working full-time on the ground floor of these organizations [who] make somewhere between $10 and 11 an hour (that’s an average) and are on public assistance?”

Covering the wage disparity between CEOs and employees, Abraham quoted Laura Otten, director of The Nonprofit Center at LaSalle University, asking, “Why are we wasting our breath and worry and concern about how much executives are getting paid instead of worrying about the issues of equity for the payment of everybody else?” Otten also stated that the situation of an executive director making $100,000 and entry level staff making $25,000 poses “ethical and moral implications.”

Abraham also examined Resources for Human Development, a human services nonprofit that in 2017 had an annual budget of $260 million. Its CEO, Marco Giordano, said that at RHD, the compensation of the CEO cannot be greater than 14 times the lowest-paid employee. Giordano, who as of this writing still serves as the CEO of RHD, said, “Acquiring and retaining leadership is vital for every human services organization, and we’re very cognizant of that at every level, but our foremost challenge is figuring out how to better compensate staff who are doing incredibly important and essential work supporting people every day.”

Although silent on what the lowest-paid employee at RHD makes, Abraham observed that while nonprofit executives should be fairly compensated according to their skills, leadership ability, and job complexity, how their compensation lines up with the mission of their organization is also a matter that nonprofit boards should take under consideration. Abraham concluded, “Leadership is valuable, but so is the work your staff is carrying out—and to do that work well (and not seek employment elsewhere), they should be compensated enough to sustain an adequate quality of life.”

NPQ has highlighted nonprofits such as EveryStep paying a livable base wage. The work of raising wages begins by asking an honest question about whether an organization’s line worker wages live up to the values the organization espouses.—Kori Kanayama