Nearly 30 Percent of Nonprofit Leaders Took Pay Cut in Past Year
Philanthropy News Digest
October 9, 2009
Nearly three in ten of the leaders of the nation's biggest charities and foundations have taken pay cuts in the past year, the Chronicle of Philanthropy reports.
Based on the Chronicle's annual survey of compensation at 325 large nonprofit organizations, fifty-seven charities and foundations — 29 percent of the 195 groups that responded to the question — said their top executive took a pay cut, declined a raise or bonus, or had his or her pay frozen in the past year. The median pay cut among those executives was 10 percent. At the same time, the overall median salary for nonprofit leaders rose 7 percent, almost double the rate of inflation. In contrast, total compensation for executives at the 200 largest for-profit companies dropped by 9 percent in 2008, according to a survey conducted for the New York Times.
Most of the increases that showed up in the Chronicle's survey were approved in 2007, when the economy was stronger and the stock market was near its peak. And one of the factors responsible for the long-term climb in nonprofit executive compensation — the increasing reliance by boards on salary surveys produced by compensation experts — may serve to curb raises in 2009 and beyond.
Ken Berger, president of New Jersey-based Charity Navigator, said there are several possible explanations for the relative paucity of pay cuts in nonprofit executive suites, including fear on the part of boards that a cut in pay will cause an executive to leave for a better-paying job. Charities may also be slow in coming to grips with changed economic circumstances. "A lot of people still haven't faced the fact that we're going over a cliff," said Berger. "This economic situation we're in is not over yet. People are hoping that things are going to turn around, and it won't be necessary to be draconian in that way."
Reprinted with permission of The Foundation Center.
