Does Obama Ever Wonder: Why Am I at This Non-Profit?

Thursday, March 3, 2011

Q. What is the biggest non-profit organization?

A. Easy. The government of the United States of America.

Q. How much is the head of the government paid?

A. President Obama gets $400,000 a year.

Q. Should the chief executive of any non-profit organization be paid more than the President?

A. That must have been answered long ago. Just look at the number of non-profit CEOs who not only make more than $400,000, but multiples of that -- millions in salaries, deferred compensation, bonuses, housing allowances, pension contributions, etc.

Q. We're asking, should they? Should they be making that kind of money?

A. Good question.

Indeed it is.

The subject of non-profit CEO compensation has been hanging in the air for years, but only occasionally does it burst into the public dialogue, usually when the leader of a prominent non-profit gets a hefty severance package.

For example, this week the contract that paid $8.6 million to Cleve L. Killingsworth, former chief executive of Blue Cross Blue Shield of Massachusetts, generated some loud headlines in the Boston press.

Within 24 hours, Attorney General Martha Coakley, watchdog of all the state's non-profits, said she would look into the Killingsworth pay-out

If Killingsworth and Blue Cross Blue Shield merit a closer look, why not every other non-profit in the Commonwealth? We have scores of them: hospitals, universities, charities, social service providers, foundations, and, of course, health insurers. Like Blue Cross Blue Shield, many of them are superb.

The argument for high salaries at non-profits boils down to, "The marketplace makes us do it." Members of the boards of directors say their organizations are large and complex and difficult to run; therefore, we have to pay top dollar to attract the kind of executive talent needed to run them effectively and for the benefit of the public.

The argument against high salaries is basically, "If you are CEO material and you want to become rich, don't choose a career in the non-profit world." Also: "In a country of more than 300 million people, there are plenty of talented, credentialed and dedicated souls who will gladly take the helm of a non-profit for a salary in the low six figures."

No matter where you come down on that argument, you can never say that, if we applied a no-pay-to-exceed-the-President's rule to all non-profits in the U.S., the chief executives of our hospitals, universities, charities, etc., would have a hard time making ends meet on $399,000 a year.

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