As a CEO in the private sector and a past and current board member for several local not-for-profit organizations, I have followed the recent media reporting of compensation of local not-for-profit executives closely. While I do think the conversation is a good one to have, the story is, as usual, much more complex than just how much an executive is paid; it is about what they do and how well they do it.
Executive compensation for any organization is the responsibility of its board. The purposes of compensating any executive are to attract and retain top talent, reward performance, comply with regulatory requirements and be accountable to the stakeholders (supporters, clients and community). Compensation may consist of base compensation, incentive compensation, benefits and perquisites. Compensation is monitored primarily by the IRS, and is reported on the organization's annual Form 990 tax form.
Some basic methods of determining compensation, in my experience, have included comparison with compensation in similar organizations (size, budget and mission), successful achievement of annual operational and strategic goals set by the board, compliance with regulatory oversight, and overall performance of the organization in meeting its mission and purpose as directly attributable to the executive.
When we as board members evaluate compensation for the executive, we are well aware of the risk that public perception will be that the person is "over compensated." While most executives that I work with in my not-for-profit experience are more highly compensated than I am in the private sector, the comparison to my salary is not important or legitimate; the evaluation must be about leadership and organizational success and performance within the context of that organization.
In their 2009 CEO Compensation Study, Charity Navigator reported: "You're better off supporting a charity that is fiscally efficient, achieving its programmatic goals and paying its CEO well, than a charity that has substandard fiscal health, fails to live up to its mission, but under-pays its CEO."
I believe that the York area has some of the best not-for-profit executives around, all working hard to fulfill the mission of their organization. Those not up to the significant leadership and management challenges of a successful organization usually don't last long in their position, regardless of the compensation.
If you have questions about compensation for a specific not-for-profit, ask them for their compensation policy and procedures. Consider the complete picture, including the overall value the person's leadership brings to fulfilling the organization's mission and the community it serves.
John A. Klinedinst
Lower Windsor Twp.