Sizing up Salaries at Charities
Charity Navigator Releases In-Depth Study on Charity CEO Pay
GLEN ROCK, N.J., October 3, 2013 –The typical charity’s chief executive officer received a 2.5% raise and received $125,942 in compensation, according to Charity Navigator, the nation’s leading charity evaluator and donor advocate.
The study examined CEO compensation at 3,929 mid to large sized charities in America to help donors, policymakers, charity Boards and others understand how leadership pay varies by the charity’s location, size and mission. Findings from the report include:
Modest raises are the norm since the recession: Salaries for the CEOs in this study increased modestly since the recession: just 0.8% from 2008 to 2009 and 1.5% from 2009 to 2010 and 2.5% from 2010 to 2011. These fairly small increases come after the 4.7% median increase charity CEOs received from 2007 to 2008.
Charity CEOs that aspire to have big salaries are more likely to succeed if they work at an Educational charity: The data shows that top pay at charities can vary greatly by mission with the heads of Educational charities earning as much as $90,000 more than those running Religious charities.
Geography influences the top executive's salary: CEO salaries at nonprofits reflect the regional variation in the cost of living. For example, CEOs at charities in the Northeast ($149,523) and Mid-Atlantic ($147,474), which include Boston, Washington D.C. and New York, tend to earn higher salaries, than those in the Mountain West ($108,893) and Midwest ($114,050), which include Milwaukee, Boise and Salt Lake City.
The bigger the charity’s budget, the bigger the CEO’s wallet: Not surprisingly, the higher the charity’s total expenses, the more likely it is that the CEO will earn higher compensation. Charities with over $500 million in total expenses report a median pay of $422,578 for their CEOs whereas charities with $1 - $3.5 million in total expenses report a median pay of just $95,661.
Mission, location and size also impact the CEO’s raise: Leaders at charities in the Northeast (2.7%), those focused on educational issues (3.1%) and those at larger organizations (3.6%) received the greatest median raises. In contrast, CEOs at charities in the Mountain West (1.8%), those working at religious charities (0%) and those running smaller organizations (1.7%) received the lowest increases in pay.
While most nonprofit leaders earn reasonable salaries, a handful earns excessive wages: 9 of the charities in the study pay their CEO more than $1 million. That’s up from calendar year 2010 when 6 charities in the study had CEOs that were paid at least $1 million.
There are still some charities that report they essentially set their CEO’s pay in a vacuum of information: Nonprofit Boards should have a documented policy for establishing the CEO’s pay. That objective process should include a review of the CEO performance and benchmarking against comparable organizations. 244 charities in this study reported that they don’t have a policy in place for determining their CEO’s pay. The good news is that this is down from last year when 543 charities reported that they didn't have a policy for setting their CEO's salary.
“Given our research, which show that the typical charity CEO earns just $125,000, we do not believe that salaries approaching a million dollars or more are needed to attract bright, able, and committed candidates to positions of nonprofit leadership. As such, we agree that donors should continue to be skeptical of charities that pay salaries hovering near or above one million dollars, but that they not discount organizations where the leader's pay is in the low six figures,” said Charity Navigator, president & CEO, Ken Berger.
CEO pay includes salary, cash bonuses and expense accounts, but not contributions to benefit plans or deferred compensation that is allocated to be paid in later years. The data for this report was gathered from the charities’ Forms 990 (annual informational tax filing) for the fiscal year ending 2011.
About Charity Navigator (www.charitynavigator.org)
Charity Navigator is the most-utilized charity evaluator in America. The organization helps guide intelligent giving by evaluating the Financial Health, Accountability andTransparency of nearly 7,000 charities. Charity Navigator accepts no advertising or donations from the organizations it evaluates, ensuring unbiased evaluations, nor does it charge the public for this trusted data. As a result, Charity Navigator, a non-profit 501 (c) (3) charity itself, depends on support from individuals, corporations and foundations that believe it provides a much-needed service to America's charitable givers. Charity Navigator, can be reached directly by telephone at (201) 818-1288, or by mail at 139 Harristown Road, Suite 101, Glen Rock, N.J., 07452.
To access the complete study, including tips to help donors evaluate CEO pay, visit: http://www.charitynavigator.org/ceostudy
To schedule an interview contact:
Sandra Miniutti, Vice President, Charity Navigator
(201) 818-1288 x105, firstname.lastname@example.org