The average nonprofit executive is higher than you might expect, unless you've been following the conversation questioning the practice of paying executive leaders at nonprofits six-figure wages. The argument runs that in order to attract top talent to expertly manage non-profit organizations, it's necessary to pay wages that can lure top managers away from the for-profit sector. However, the disconnect between an organization's mission, often related to serving the needy, and that organization using a significant portion of funds raised to pay a senior executive, often rubs donors the wrong way. Depending on the size of the nonprofit organization, the location and the executive's level of experience, some non-profit executives command nearly $1 million per year, such as the chief executive of the Boys & Girls Club, according to "The New York Times."
Trends
According to "The New York Times," most non-profit charities pay leaders much less than corporate executives. And those that pay leaders high six-figure incomes and take in more than $100 million each year are the exception rather than the rule; according to figures cited by the "Times," such charities account for just two-tenths of 1 percent of the over 1 million nonprofit groups in the United States. However, the Times also notes that compensation awarded to nonprofit leaders follows no discernable pattern. Typically museum directors and hospital chiefs are better paid than other nonprofit leaders.
Factors
Many non-profits set the salaries of non-profit executives using a compensation committee of the organization's board, which works in conjunction with the non-profit's human resources representative. They consider comparative data, the opinion of consultants and reviews that measure the performance and experience of the executive against different benchmarks. In some cities, the cost of living also is taken into account when setting salaries. Some argue that the salary of the CEO of any company, regardless of whether the company is in the private or non-profit sector, should be paid in direct proportion to their lowest-paid employee.
Average Earnings
A 2008 survey of non-profit manager salaries, as discussed in an article on Slate.com, found that the average salary for the executives of non-profits was around $150,000 annually. The article noted that pay varies according to the size of the charity and the charity's total assets. Of non-profits evaluated, it was also reported that the average CEO's salary was around 3.32 percent of expenditures; for purposes of comparison, the Slate article observed that the average compensation of a CEO at a S&P 250 company is $11 million.
Implications
Charity Navigator, an organization that rates non-profits, completes a survey each year on CEO compensation. Among the findings included in the group's 2010 report was that since the average charity CEO earns around $150,000, donors should not be alarmed that a charity CEO has excessive pay if she receives a six-figure salary. The study also noted that the northeast and mid-Atlantic region had higher CEO pay, and noted that those working with education, arts, culture and humanities, and public benefit typically had higher salaries than those in the environment, religion, animal welfare, human services, international and health sectors.
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