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The outlandish radio host Howard Stern talks about all things sexual, but when it comes to his compensation, he says, “I don’t talk about my salary.”
That’s the way many of us feel. A person’s pay is not a subject for polite conversation.
That is especially the case for executives of charity or nonprofit organizations. With charities, there is, at least by the public, an expectation of modest salaries because the act of “doing good” is itself part of one’s compensation.
That is the case for the majority of nonprofits in North Carolina, according to the N.C. Center for Nonprofits. The median salary of chief executives is about $60,000, says the Center. A quarter of the executives have no company paid medical insurance.
The Center’s Chair Tog Newman of Winston-Salem adds, “The large majority of nonprofit workers are committed to their missions, highly educated and in most cases, underpaid.”
That is why a recent report in the Triangle Business Journal caused some teeth grinding. The report showed the pay for 10 nonprofit executives in the Triangle, and the salaries were more than generous.
The big winner was William Hudson who made $827,000 in annual salary. He heads a Durham charity called LC Industries that employs visually impaired workers. The nonprofit manufactures and distributes mattresses, housewares and paper products, much of them to the military and federal government.
Goodwill Community Foundation pays its executive Dennis McClain $394,000.
These kinds of salaries are not limited to the Triangle. A Charlotte Observer article in 2009 reported on a Cornelius nonprofit that offered credit counseling gave its executive director John Waskin a $5.1 million payment for his pension fund when the company went broke.
The Observer also noted that nonprofit leaders nationwide on average received a 6 percent raise in 2008 while their counterparts in the private sector took a 9 percent pay cut. Hudson, for example, made over $700,000 in 2008 and $827,000 in 2010.
As nonprofits, these organizations receive tax breaks that total over $60 billion. There is a provision in the tax code that allows the IRS to police nonprofit executive pay, but it seldom does.
Rather, the policing falls to the boards of nonprofits. And too often, those boards are selected because of close ties to the respective nonprofit’s executive. When those boards do not provide oversight on excessive pay, says Jane Kendall, president of the N.C. Center for Nonprofits, they are not doing their job.
And when the boards do not do their job and the IRS does not question nonprofit status, the only recourse is public shaming. And that’s a shame.
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