When we hear "nonprofit," most of us imagine an organization filled with the ultimate do-gooders: those angelic advocates who are willing to sacrifice their own financial gain to serve a noble cause. If you've ever worked for a nonprofit, you know first-hand that every red cent is closely monitored. Nonprofit workers often struggle to make do with scanty office supplies, assistants must request a key to access the copy machine, overnight shipping is frowned upon and employee salaries are negligible. Or are they?
It seems that some nonprofit employees are better compensated than others. We're talking about the CEOs at the helm of these virtuous organizations, as well as those well-read professors and winning coaches at nonprofit universities. These are the folks that many critics are calling the "nonprofit millionaires."
As a matter of fact, many CEOs at the head of the largest nonprofit hospitals, museums and religious organizations earn as much dough as executives who run major for-profit corporations. And the professors and coaches who work for major nonprofit colleges? They often earn even more. (Learn more about these careers in Social Finance Careers: Creating A Better World.)
Surprisingly, executives at the head of leading nonprofit foundations earn as much as $1 million to $4 million a year, according to The Chronicle of Philanthropy. These compensation packages often include salary, bonuses, health insurance and other benefits. For the past 17 years, the Chronicle has released its annual compensation package rankings for the wealthiest U.S. charities and foundations that raise the most donations. The 2008 list included a whopping 325 nonprofit organizations. Also included is a couple top Canadian nonprofit earners.
At the top of the pay list was James Mongan, CEO of Partners HealthCare System, which operates a group of nonprofit hospitals in Boston. Mr. Mongan, who is also a Harvard Medical School professor, brought home some serious bacon in 2008. Partners HealthCare System paid the wealthy professor $3.4 million for his loyal services.
The second on the nonprofit executive salary list was Glenn Lowry, director for the Museum of Modern Art in New York City. Although Lowry earned nearly $700,000 less than Mongan in 2008, he brought home $2.7 million. Coming in at a close third was Steven Altschuler, who earned $2.4 million as the CEO for the Children's Hospital of Philadelphia.
But nonprofit CEOs aren't the only ones raking in the big bucks - many other nonprofit employees are earning some major moolah, too. For example, there's David Swensen, chief investment officer for Yale University. With a $4.3 million in compensation, Swensen earned even more than top-paid CEO Mongan in 2008.
And let's not forget those well-paid college coaches. (Yep, many private colleges and universities are considered nonprofits, too.) Pete Carroll, the head football coach for the University of Southern California Trojans, scored a winning $4.3 million in 2008, while Mike Krzyzewski, head men's basketball coach at Duke University earned $3.7 million.
In Canada the compensation is very charitable. For example Stephen Toope, President of the University of British Columbia made $523,134 in 2009. In Alberta, Calgary Health Region's former CEO Jack Davis received a C$5.7 million severance and retirement package in late 2008. In 2009, nine workers made more than $350,000 on Alberta Health Services. Not bad for a not-for-profit organization.
Here are a few more nonprofit executives and employees who topped the Chronicle's prestigious 2008 compensation list:
- David Silvers, Clinical Professor of Dermatology at Columbia University: $3.7 million
- Zev Rosenwaks, Professor of Obstetrics and Gynecology at Cornell University: $3.3 million
- James Madara, Vice President of Medical Affairs at University of Chicago: $2.8 million
- John Powers, President of Stanford Management Co., Stanford University: $2.4 million
- John Sexton, President of New York University: $1.3 million
- Lee Bollinger, President of Columbia University: $1.3 million
- Amy Gutmann, President of University of Pennsylvania: $1.2 million
And your parents told you that you'd never bring home decent salary from a nonprofit!
Shocked and appalled at these exorbitant executive salaries, some critics believe the IRS should put a cap on the amount of money a nonprofit CEO can earn. As of right now, the IRS simply states that nonprofit CEOs should receive "reasonable compensation."
Obviously, the definition of "reasonable" varies wildly among nonprofits. While some organizations believe $150,000 is perfectly sensible, others seem to think their noble CEOs deserve millions. After all, there's nothing quite like driving your Ferrari home to your 6,000 square foot mansion after a long, hard day of fighting for the cause.
Learn more about nonprofits in Navigating Government And Nonprofit Financial Statements and Deducting Your Donations.