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How much should non-profit leaders earn?

The recent controversy over the CEO's compensation at the Boys and Girls Clubs of America has re-opened a long-simmering debate about what public leaders should be paid. Outraged by CEO Roxanne Spillett's nearly $1 million package, four Republican senators have placed a hold on a $425 million Boys and Girls Clubs funding bill until the organization provides more information.

Spillett's 2008 mega-package included $361,000 in base salary, a $150,000 performance bonus, and $363,000 in deferred compensation, which the organization claimed was essential "to be fully competitive with similar national large non-profit organizations." Noting that the Boys and Girls Clubs lost more than $13 million that year, the four senators called the organization top heavy, poorly managed, and largely unresponsive to the needs of its 4,300 local clubs.

If the question is whether Roxanne Spillett makes too much money, the answer depends on which salary is under scrutiny.

On the one hand, Spillett's $361,000 base salary is well within normal compared with other large organizations in her sector. Her base would be twice as high at the Mayo Clinic and about the same at World Vision and Food for the Poor. Although endowment managers, artistic directors, and medical officers make much more, Spillett is none of the above.

On the other hand, Spillett's $1 million package seems inappropriate for an organization that serves so many poor children. It is certainly beyond the compensation envelope for the federal government's top officers. She makes almost two-and-a-half times more than the president of the United States, and almost five times more than the vice president, cabinet secretaries, the chief justice of the Supreme Court, and members of Congress. Either she makes too much or government's leaders make too little, or perhaps a bit of both.

Americans are unlikely to give Spillett the benefit of the doubt whatever her explanation. To the contrary, Spillett's package merely confirms what most Americans already believe about charities. Asked about CEO pay in 2008, almost half of Americans said the leaders of charitable organizations made too much money, while just seven percent they said they made too little.

Americans no doubt love the Boys and Girls Clubs of America, but might wonder why the CEO needs $1 million a year during the worst recession in modern history. They might also ask why so much of the package is hidden from public view in the incentive bonus and deferred compensation.

Even though Spillett is one of the most talented CEOs in the charitable sector, she would be well advised to take a voluntary pay cut. At the very least, she should return the $150,000 incentive bonus as a good will gesture. She should also return the deferred compensation. The closer she gets to her $361,000 base, the better.

Not only does her total compensation send a message of largesse both inside her organization and across the charitable sector, it is bad politics on Capitol Hill. Having spent more than $500,000 on lobbying in 2008, the organization should know what flies in Congress. A pay cut may be the only way to save the $425 million that the Boys and Girls Clubs almost had in their pocket until the four senators checked the pay stubs.

Public leaders such as Spillett must always maintain a delicate balance between appropriate compensation and public concern. They are public leaders after all. They must be sensitive to the steady erosion of public trust in their organizations and the need for reasonable, not excessive compensation. They should not have to take a vow of poverty to serve, but neither can they earn so much that their self-interest seems in charge.

If Congress wants to find a silver lining in all this gold, it should consider pay standards for public leaders of all kinds, and not just those who work in charitable organizations. Some of these leaders receive their checks directly from the U.S. Treasury, but many others are hidden from view because their salaries are paid through contracts or grants. But no matter how they get their pay, they are all public leaders nonetheless, and are bound by a common commitment to what Alexander Hamilton called "extensive and arduous enterprises for the public benefit."

The Obama administration is starting to get the point. Its "pay czar" capped CEO salaries at bailout banks at $500,000 per year, and is working to find some answer to the compensation puzzle on Wall Street. The administration is also beginning to wonder whether it is time for a cap on total compensation for its contractors and grantees.

If there is to be a cap, it should not be a penny more than the $223,500 that the chief justice receives. The nation would quickly find out how long the penury toward government's top officers will last. Contractors and grantees would fight the cap with every lobbying dollar they have, of course. But if Congress and the president stand firm, perhaps they can restore at least some balance to the CEO pay scale.

By Paul Light

 |  April 22, 2010; 9:23 AM ET |  Category:  Nonprofit leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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I think it's important for nonprofits to be extremely transparent in where the money from donations is going. For example, the nonprofit Wideawake.org has an "Every Penny Policy" that guarantees that all money donated goes to projects/charities. (http://www.wideawake.org/every-penny-policy)
This is so important to donors, don't you think???

Posted by: nonprofittransparency | April 27, 2010 10:30 AM

Kudos to CMTG,

The pay that non profit executives make is a joke compared to the rank and file. Job postings frequently referring to job titles as Specialist, Guru or the like pay ridiculously low salaries for the job requirements. I have started telling the HR dept. what I think about their choice of words.
Executive pay needs to be moderated and other staff need a boost.

Posted by: notprofiting | April 26, 2010 9:31 AM

MYKALADRIAN (above) poses a very legitimate challenge: “What is this incentive package? Incentive to do exactly what? It’s not as though she needs to raise the stock price or improve market share.”

I think that MYKALADRIAN asks the right questions, although I suspect his/her assumptions are different than mine. Spillett doesn’t need to be accountable for any of those goals, but what if she were being held accountable by her board for reaching other goals, goals that arguably have a much greater social and economic benefit to society?

On its website, the Boys and Girls Club offers some pretty frightening statistics:

• In 2006 alone, 1.2 million teenagers did not graduate on time from public high school in the United States – that's 30 percent of the class of 2006.
• 31.9 percent of youth in the United States, ages 2 through 19, are considered obese or overweight. This figure has nearly tripled in the last 30 years.
• Nearly one half of all blacks, Hispanics and Native Americans fail to graduate from public high school with their class. Many of these students abandon school with less than two years to complete their high school education."
• According to the Bureau of Justice Statistics, blacks were almost three times more likely than Hispanics and five times more likely than whites to be incarcerated.

Boys and Girls Clubs of America's bottom line is not about returning a profit to its investors; it's about effecting meaningful change through its programs. With that in mind, here are the questions I’d like to ask: How much do these sobering conditions cost our society? What does it cost to turn these numbers around? What role does the Boys and Girls Club of America play in winning these battles, and how do they know they are making progress toward achieving their goals? More to the point, what is the bottom line for Boys and Girls Clubs of America, and to what extent should the CEO's incentive bonus be tied to achieving those goals?

If we could talk about these questions in a rational way, then maybe we’d be better positioned to have a meaningful debate about how much are we can and should pay the people who deliver on our most serious social issues.

Posted by: asherman2 | April 23, 2010 4:58 PM

I think that what often gets lost in the furor over "exorbitant CEO pay" is the oftentimes gaping distance between the pay at the top and the pay for the rank-and-file. Ms. Spillett may be making bank, so to speak, but what are the non-executive employees making?

People can rail against excessive CEO pay all they please, but that doesn't change the fact that many of the rank and file in the NPO world work for such low salaries that we are barely scraping by.

Overhead and the "greed" of non-profit executives have been pounded into everyone's head as a terrible thing - but whether the general public would like to admit it or not, non-profits need to pay their lower-ranked employees a decent salary.

If they don't, the organization will become a revolving door simply because rental, food and other companies don't accept "passion for the mission" in lieu of cold, hard cash.

Posted by: Cmtg | April 23, 2010 3:07 PM

While we can rightfully express outrage for the size of the compensation package, the CEO does not set his or her compensation. That is the responsibility of governance -- the board of directors. One of the most important responsibilities of the board is to hire, employ, retain and oversee the best CEO possible. The key method that boards use to retain the CEO is compensation. And the IRS requires tax-exempt organizations to use a process that ensures compensation is market relevant. Yes, the CEO does negotiates with governance for the best package possible, but it governance that decides. As a result, governance is the rightful party to be held accountable.

Posted by: DrLloyd | April 23, 2010 11:34 AM

"And as for: 'There is something inherently wrong with CEOs of organizations that serve the poor earning vast sums of money that comes from the charitable giving of people who are themselves struggling financially and from the government, whose money comes from taxpayers of all incomes,' how is that different from any commercial venture which takes money from 'people who are struggling financially' whether for a car or shoes?" -- You wonder what the difference is? The difference is that the first is charitable giving, something done for the benefit of people in need. The latter is a consumer purchase. Greed is not justified in either arena, but it is particularly egregious in charitable giving. If you buy shoes you get, ahem, shoes. If you donate for the good of children and your money is siphoned off to over-the-top executive pay, you have been the victim of fraud, as have the children in need (who were the inspiration for your donation). Yes, your husband's $38K/yr salary is low, but there is a big difference between his pay and the B&G Club CEO. Moderation is a good goal.

Posted by: justworld1 | April 23, 2010 10:46 AM

I would never give a dime to any non-profit that had a CEO making an obscene amount of money. Consider the hypothetical non-profit set up to help starving kids in Africa. You'd donate money thinking it would go to the starving kids, right? But what if you're contributing substantially to the BMW payment of some overpaid CEO?

Perhaps they should pas a law requiring all non-profits to divulge the compensation structure of their personnel. Then people can decide how to direct their charitable contributions so that they go to the intended recipient and not some idiot's BMW payment or McMansion upkeep.

Posted by: John991 | April 23, 2010 2:11 AM

The cost of a Masters in Teaching is comparable to that of an MBA. A teacher in many states would have to work over 20 years to receive a million dollars in total compensation. The public is becoming increasingly aware that CEO compensation in both for-profit and non-profit sectors is often outrageous.

Posted by: gladkins | April 23, 2010 1:59 AM

I don't think you should stop with non-profits. What do you think about limiting the pay for spouses of members of Congress?

How about limiting everyone's pay? Certainly a donor to a non-profit surely has more ability to impact his/her chosen charity than the average stockholder of a for-profit enterprise.

Posted by: abc1 | April 22, 2010 11:42 PM

My husband runs a non-profit. It's total funding is $5.9 million and he makes $38,000 a year. He is a Harvard MBA. He works very hard at what he does. I fail to see why, because someone works at a non-profit, they should have lower salaries. They are providing a socially necessary (in his case recovery housing for addicts) or desired service. The work is hard. The conditions are poor. There is no security and benefits are terrible. The issue of tax exemption is a red herring. The organization is tax exempt. He pays taxes on his income. And as for: "There is something inherently wrong with CEOs of organizations that serve the poor earning vast sums of money that comes from the charitable giving of people who are themselves struggling financially and from the government, whose money comes from taxpayers of all incomes," how is that different from any commercial venture which takes money from "people who are struggling financially" whether for a car or shoes?
If anything, I think that people who give their lives to help other people should be paid more, not less that those who turn a profit by packaging securities and marketing them to clueless investors.

Posted by: elgoth | April 22, 2010 10:32 PM

I always find it difficult contributing to organizations where upper management gets paid more than I do.

What about a bidding process? The lowest bidder gets the job.

I have offered to donate half the wages of an upper management position to the cause, since I would work for less. No non-profit has taken my offer. I guess they are more interested in employee compensation instead of providing benefits to their clients.

Posted by: SteveR1 | April 22, 2010 8:59 PM

In 2008 the salary and bonuses of the so-called "non-profit" Blue Cross Blue Shield chairman and chief executive, Cleve L. Killingsworth, was 4.6 million dollars -- in a year when they had a 49% drop in net income.

The Boys and Girls Club of America isn't even in their league.

Posted by: whm99 | April 22, 2010 8:27 PM

$1 million does seem to be way too step a compensation package for the head of a non-profit -- even one as large as the Boys and Girls club.

There's probably more to this story though given the Senators who are involved in highlighting this controversy. If you really got into the weeds on this one, I suspect you'd probably find that the issue isn't so much the CEO's compensation -- it's the fact that the CEO works for an organization that primarily benefits poor and working class kids. I suspect if the Senators had their druthers they would simply pull the plug on funding on that basis (e.g. because Bush GOPers pretty much uniformly tend to favor orgs and businesses who line their own pockets and fill their campaign treasuries).

The CEO should remove any reasonable objections and see where these four Senators stand on this issue after a real accommodation has been made.

Posted by: JPRS | April 22, 2010 7:24 PM

This pay package, like many others in both the public and private sector, is RIDICULOUS----what is this incentive package? Incentive to do exactly what? Its not as though she needs to raise the stock price or improve market share. A salary of over $300k+ should be more than sufficient to motivate this woman to do her job...What's more disgusting is that the organization spent over $500k in lobbying...That's money that could have funded much needed programs targeted toward the population that this organization is supposed to serve...This all makes my stomach turn, and the sad part is that this woman is not alone in terms of being over-compensated.

Posted by: mykaladrian | April 22, 2010 7:22 PM

When you say the President only makes $400K a year, you're not considering his "benefits" such as that nice private jet called Air Force One, his beautiful home office at 1600 Pennsylvania Avenue, and the security, health, dental, and other benefits that he receives. From an economic standpoint, you might also consider the value of the presidency (or any other major government public office) as a post-term career. Bill Clinton reportedly makes $1 million per speaking engagement and much more in royalties from his book.

You can look at Supreme Court Justices in a similar way. If you want to consider Ms. Spillett's benefits, consider their benefits as well. Again from an economic perspective, look at their expected income for life which is considerably hire than that of Ms. Spillett's as she presumable has some risk of losing her job, probably will not have an opportunity to be hired for major speaking engagements, and most likely will not be picked up for an immediate best-selling memoir.

High-profile public positions come with low salaries because the people who hold those positions have numerous other sources of income. President Obama filed his IRS forms for 2009 with over $4 million in taxable income, and that's not counting the $1 million+ prize from the Nobel Prize committee which he asked to be donated directly to charities. To say that the President makes $400K or that the Chief Justice Roberts makes $223,500 is simply not true if you want to take into account benefits.

Should there be a cap? Maybe, but it sure as hell shouldn't be $223,500. If you want to go on the Chief Justice-thing, be my guest, but take into account the "true compensation" which includes the economic benefits and security of tenure that come along with that position. I'm sure some economist somewhere could come up with a more accurate price.

Posted by: bmgleason | April 22, 2010 7:06 PM

Running a nonprofit always has been difficult. They are supposed to be producing something of value, but it often is more difficult to measure than the useless junk we're on offer at wal-Mart. In general, executive talent seems to have little to do with compensation and this has been true for ages. OTOH, the Boards of Directors of these orgs and private sector orgs should be expecting something in return for large salaries and this often is missing. Unfirtunately, those who sit on boards often are senior executives with the same inflated sense of executive value.

Posted by: thebuckguy | April 22, 2010 5:54 PM

"You will now be limiting the pool of capable nonprofit executives to those who not only have the qualifications, but also those who are OK making less than 10X what they could make in the for-profit sector."

This is the myth that is prevalent across the whole country. The idea that CEO's are some special beings.

I worked for a medium sized start up company in the early part of this decade. The owner brought in a new CEO, a guy who had taken his previous company down the tubes.

We started w/ $150 million dollars, 18 months later we were in Chap 11. The CEO took a ceremonial pay cut to $1/yr, or so we were told. He left about a month or 2 later w/ a $500,000 bonus.

Several months later he was hired as CEO at another company.

The idea that once someone becomes a CEO they are magically bestowed w/ super managerial skills is hogwash.

There are plenty of intelligent, educated people out there willing to work for reasonable compensation and who would probably do a better job.

Posted by: BEEPEE | April 22, 2010 4:02 PM

You're really proposing nonprofit CEOs' salaries should be limited to the Chief Justice's salary?

The Chief Justice is appointed for life. That's pretty good job security -- a priceless employee benefit, if you ask me. Nonprofit leaders receive no such promise of lifetime employment.

Posted by: jb1151 | April 22, 2010 3:55 PM

If this were a fully private enterprise, then they should be able to pay what they choose.

But this is a charity, supported by donations that are frequently claimed as tax deductions, and they do not pay income tax, or in many states, property tax.

Before getting into a cap on CEO salaries, why not a simple requirement that every charitable solicitation be accompanied by a disclosure of the salary of the CEO in the same print size as the rest of the solicitation. Seeing "Boys and Girls Clubs of America 2009 Chief Executive Officer compensation $1,000,000" ought to do the trick.

Posted by: bk0512 | April 22, 2010 3:50 PM

Please don't forget to take into consideration the value, over a lifetime, of access to subsidized high-quality health care insurance and pensions large enough to live on after retirement when you compare professionals working outside the Federal government to those within. My family has been on both sides, and I would trade the security, relatively high salaries and pensions afforded those working in the upper levels of government ANY DAY for the insecurity that even well-paid (say $200K) non-profit CEOs live with. My husband, a highly regarded professional, has been in the non-profit upper-level (including three CEO stints) management business his entire career; he has been irrationally fired three times (by those untrained volunteer boards), been on unemployment--at length -- twice, been within one day of having a family completely uninsured for health care, and has about $270,000 total in retirement fund, at age 57, and nothing else. I am not complaining. But it is not accurate to compare his current salary (just shy of $200K) to that of a Supreme Court Justice with his or her other, very substantial, benefits.

Posted by: oakhill | April 22, 2010 3:49 PM

I think there are a number of lazy assumptions in this analysis.

--Why compare her salary to government salaries? This has nothing to do how much the president makes. There are good reasons that his salary is low.

--Where is the Board of Directors in your analysis? They are the ones approving salary agreements. Asking her to take a voluntary pay cut is beside the point. Would you take one? It's up to our employers to decide what to pay us--and up to us whether to accept it. But if there's a governance problem, then address it with the Board.

--How is her total pay package "hidden from public view"? You and the US Senate found out about it.

I'm not a big fan of the big national nonprofits. But hold off on the "pay-baiting" of nonprofit leaders.

Posted by: mathews2 | April 22, 2010 3:38 PM

I usually do not agree with these holds by individual Senators. This one is fully justified. Most contributors to the Boys and Girls clubs have to work one to three decades to earn as much as this CEO is paid. What do they pay their other executives?

No taxpayer funds should be given to this orgaization and it is not worthy of private donations.

Posted by: esch | April 22, 2010 3:35 PM

remember that many of these non profits funnel money for dems to be elected and they also run commercials...

Posted by: DwightCollins | April 22, 2010 2:19 PM

I have worked in a non-profit where not only were the salaries of the top administrators very high relative to all other salaries, but the organization also has a plethora of top administrators, e.g. an organization of about 130 employees has 8 VPs and 2 "Deputy Presidents" in addition to the President, all of whom make salaries well into the six figures. If the average salary is $170,000, then that is $1.87 million of expenses, of a budget of only $15 million in total, just for top level salaries. There is something seriously wrong with this in a non-profit that is supposed to be about bettering humanity.

Posted by: AnonymousBE1 | April 22, 2010 2:11 PM

From Paul Light:

Somebody needs to show me evidence that multi-million $ private pay is related to performance. It is a very squishy relationship. There's some good research showing that CEO salaries have much more to do with their public visibility as change agents than their actual bottom-line performance. But I'm open to anyone who says otherwise with hard evidence. Best. Paul

Posted by: paullight | April 22, 2010 1:39 PM

Non-profits in the US are very unique that can't be found in many other countries. People who are charitable-minded go to work for non-profits at least for some time for the betterment of the society. Non-profit Board Directors are volunteers. It is outrageous that Ms. Spillett and similar CEO's are so greedy working with non-profits. They should never be there.

I have been working for non-profits for more than two decades in middle management, and have to often sacrifice part or the whole of my salaries when the organization is in dire financial troubles. The notion that these some CEO's are indispensible is pure non-sense and just b.s. Most of them came to non-profits only to be bosses which they can't dream anywhere. Only those people want a lot of money, not the real charitable CEO’s.

Posted by: ing1 | April 22, 2010 1:31 PM

Mr. Light,
Nothing good is gained by fanning the flames of discontent with misinformation and sensationalized statements.
Facts: Based on the numbers you present and what I see in the 2008 990, Ms. Spillett does not have a $1million compensation package. The 3 numbers you present total $874k. Posing the question, ". . . CEO needs $1M . . ." assumes that Ms. Spillett actually receives $1M. There are several different types of deferred comp, but in all cases deferred means that the employee is not "receiving" the comp. So that brings down her possible usable compensation to $511k. Now, unless you have access to information not available to the general public, you have no idea how much of the $511k is actually paid to Ms. Spillett -- taxes, pension or retirement plan contributions, non-cash benefits such as a car or driver, etc. can play significantly into reportable W-2 income.
What constitutes "excessive" compensation? Good question. Not sure that I would want to readily assign a value for the stress and time and energy demands placed on a position such as the one Ms. Spillett holds. What I do know, though, is that for me, the value isn't great enough to lure me into a CEO career path - non profit or for profit.

Posted by: CAN50 | April 22, 2010 1:29 PM

Sad to say so many nonprofit CEOs are bilking their organizations for all they can get. Even small organizations like Hispanic Scholarship Fund have incredibly high pay for CEOs given their mission of helping very low income Latinos.

Posted by: Myturn2 | April 22, 2010 1:21 PM

I find it hard to make contributions to any charitable organizations whose president's and top managment make an excessive salary regardless of how low their percentage of overall overhead costs are. It sends the wrong message when charities become lucrative high salary careers. A true charitble person should take a modest stipend and or salary to make ends meet and the greater reward is knowing you are doing work for the greater good, not for enhancing wealth

Posted by: tomdc99 | April 22, 2010 1:18 PM

This is no ones business except those that donate. The government needs to be out of it. That being said many of the leading charities and non-proffits are nothing but money makers for the people that run them. Benifits paid out in their primary mission are small.

Posted by: Pilot1 | April 22, 2010 1:10 PM

I certainly agree with the idea that rarity of executive talent is a myth, and that the notion executives have to be paid very highly in order to do their jobs adequately is nonsense. The only reason executive salaries are so high is because the statistically tiny fraction of society that sets salaries (executives serving on each others' boards) can get away with it. The phenomenon is characterized as "distributed harm for concentrated benefit": taking a little bit from a lot of people makes you VERY rich. Executives have long abandoned any sense of service to organization or to stockholders. They now concentrate on stealing what they can. They are very good at this!

Posted by: frodot | April 22, 2010 12:53 PM

[sigh] You don't get it. You just don't get it. These are NON-profit organizations. So in order to eliminate the profit, they have increase the salaries. I have to explain everything to the minions!

Posted by: forgetthis | April 22, 2010 12:43 PM

There is something inherently wrong with CEOs of organizations that serve the poor earning vast sums of money that comes from the charitable giving of people who are themselves struggling financially and from the government, whose money comes from taxpayers of all incomes. The stated missions of these nonprofits are just hollow words in the face of these kinds of corporate remuneration. Effective leadership of nonprofits requires that those at the very top are endowed with the spirit of generosity -- not greed. What of the service providers on the frontlines of nonprofits often barely earning living-wage hourly salaries? Forget about benefits, like health insurance, for the many souls who work directly with the boys and girls that need services. Please, to those in want of grand salaries, there is private industry. In today's economy the last thing we can afford is the notion that over-the-top compensation is in any way related to a return on investment.

Posted by: justworld1 | April 22, 2010 12:41 PM

Donors need to make it clear that they will allow their donations to be used for excessive salaries. I know that when I make donations, that is one of the first things I check. I will never donate money to any organizations that pays such high salaries. The only reason they have risen so high is the good ole boy network has allowed them to.

Posted by: mdembski1 | April 22, 2010 12:33 PM

this is unrealistic. how would a major hospital find a qualified CEO for 200K? the volunteer board of a hospital decides how qualified the CEO needs to be, and how much has to be paid to get one. Not for profit businesses have to compete in the same market for the same talent. not for profit can't mean substandard quality. I don't want a 200K CEO in the hospital that gives me care.

Posted by: JoeT1 | April 22, 2010 12:26 PM

Oh, the myth of the rarity of executive talent.

Limit pay to combined $500,000 per year, including all payments for base, bonus, pension, deferred compensation, car, club membership, etc, etc. etc.

Then, let those who can make more in business go to the busness sector. Let them go.

There are a lot of extremely talented, capable, people with great leadership skills out there in the world who would be delighted to make %500,000 per year.

Posted by: amelia45 | April 22, 2010 12:00 PM

CEOs and/or directors of non-profits should make exactly what the market will support. Just because we choose to help the poor and disadvantaged does not mean that we deserve any less compensation. I would also suggest that before making such statements, Mr. Light review non-profits such at Brookings, Rockefeller Foundation, etc. and multi-lateral institutions compensation. Are they not as well supposedly helping the needy?

Posted by: sanet | April 22, 2010 11:59 AM

The author is apparently ignorant of what's been happening in the nonprofit sector in the last 10 years. Running a nonprofit business has become more difficult and nonprofits are increasingly hiring business-savvy people to run them. An MBA or other advanced degree is now considered a requirement for most nonprofit executive director positions. Education is an expensive investment and you can't expect people to live in debt their whole lives.

A $1M compensation package has to be compared with the package available to a for-profit CEO in an organization of similar size and responsibility. CEO's of comparable for-profit organizations to the one mentioned typically make 10x as much as their nonprofit counterparts.

Go ahead and put a ceiling on nonprofit salaries. See what happens. You will now be limiting the pool of capable nonprofit executives to those who not only have the qualifications, but also those who are OK making less than 10X what they could make in the for-profit sector.

Donors and foundations aren't stupid. If they think a nonprofit organization is inefficient, or paying too much in salaries, they can and will put their donations elsewhere. If her organizations suffers because of her salary she is responsible for that and can take appropriate action then. Asking her to cut back on a salary that is already more than 10x less than what her for-profit counterparts make is ridiculous.

Posted by: aquinas2 | April 22, 2010 11:44 AM

Mr Light writes that a cap on CEO salaries would quickly inform the nation "how long the penury toward government's top officers will last." This suggests that the net effect would be to RAISE government salaries rather than lower contractors' salaries.

Posted by: Paaa | April 22, 2010 11:10 AM

99.73% right. The cap on TOTAL compensation should be below what the Chief Justice receives. Only exceptional circumstances allows pay = to Chief Justice.
The IRS should write a rule stating that compensation above $200K is an improper benefit for management and is sufficient to lose or deny tax exempt status. Many improper activities allow for termination or denial of non-profit status. Applicants for non-profit status must promise compensation not to exceed $200K. They should also include a clause that compensation for management of entities related to the non-profit, or those who provide generic services (such as management consulting) are also limited. This is needed to close the loophole that allows a non profit to hire a consulting firm and transforms its income into their profits. Ex: The CEO of a non-profit hired a company managed by his nephew (majored in drinking cups used in stone cementeries in 9th century Asia, with a minor in high alcohol drinking and gambling) to provide consulting services on optimal electronic chip design for hardware-based telephone security protection, a job that requires this guy to travel throughout the world testing the telephone systems of major hotels and their connections to beaches, casinos, horse races, ladies walking late at night.
Exemptions could be made to allow physicians and others to earn income from unrelated activities. CEOs of non-profits could pick up garbage to keep streets clean, make a living selling refurbished PCs and refrigs or cutting lawns (usually not in conflict with their tax exempt).
Properly implemented, these requirements will open the doors to a flood of highly qualified applicants willing to work for merely $150K/year, a sacrifice many highly competent individuals with high IQs and expertise are willing to take to replace the lucky people who poorly manage many enterprises. An unexpected benefit would be improvements in funcion and outcomes of non-profits (better health care, job creation, etc.) and fewer scams. Sure, the crooks will lose and complain to their congressman. I feel really sorry that we can’t have a win-win for crooks, criminals, scammers and the competent working people.

Posted by: coolfoods1 | April 22, 2010 11:08 AM

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