Recession-Proof Job? Non-Profit CEO

(CBS)  Updated 11:02am ET

As head of the Central Carolinas division of United Way, Gloria Pace King was known as a strong fundraiser. CBS News correspondent Sharyl Attkisson reports she was also a pretty good at looking out for No. 1.

At United Way, King pulled in a $380,000 salary ($379,962 with a 2008 bonus) and a $2.1 million retirement package.

The surprising truth is, while last year's compensation fell 9 percent for CEOs at for-profit companies, their cousins in the charity world were making out quite nicely. Their salaries increased on average by more than 6 percent.

In the environmental category, Wildlife Conservation Society's CEO Steven Sanderson got a $100,000 raise -- to pull in a very civilized $938,000 compensation.

Charity Navigator
United Way

Under religion, Inspirational Network's David Cerullo earned an awe-inspiring $1,580,000.

And in the children's category, Chief Scout Roy Williams retired in September 2007 with a package worth nearly $4 million.

Non-profits don't have to pay taxes. Some of them use the money for lavish executive pay instead of their mission. IRS rules forbid "excessive" compensation, but that's subjective, and the tax man isn't known for going after charities.

"They say to themselves, 'If we don't give this person $700,000, that means that the job's not important and he can't do a good job'," said Pablo Eisenberg, a senior fellow at Georgetown University Public Policy Institute. "I mean that's the thinking, and it's appalling."

Even some small, inefficient charities are digging deep for their CEOs. One reason they get "zero" out of four stars from the non-profit evaluator Charity Navigator.

The Association for Firefighters and Paramedics spends more on their President's six-figure salary ($125,000) than on services ($107,048).

The Committee for Missing Children spends only 14 percent of its budget helping kids. The rest is spent on fundraising and administration, including the CEO's salary.

Back in Charlotte, the United Way has made some big changes.

Jane McIntyre was hired in August after King and her colossal paycheck were forced out. Although she's earning a lot less money than her predecessor, McIntyre said she's happy with the salary she has: $142,000, to be exact. But McIntyre says it's more than enough when you're in it to help others more than to help yourself.

Spotlight on The Wildlife Conservation Society

CEO Steve Sanderson ranks number 12 on American Institute of Philanthropy's 2009 List of Top 25 Compensation Packages. Here is the information from the group's Form 990's which are filed annually with the IRS.

2006: Total Compensation: $825,170

Salary: $490,679

Deferred Compensation: $207,069

Expense Account, Other Benefits: $127,422

2007: Total Compensation: $832,791

Salary: $489,663

Deferred Compensation: $204,149

Expense Account, Other Benefits: $138,979

2008: Total Compensation: $938,119 (Nearly $106,000 more than in 2007)

Salary: $503,927

Deferred Compensation: $212,714

Expense Account, Other Benefits: $221,558

According to IRS filings, Sanderson's deferred benefits were "payable June 30, 2009."

Wildlife Conservation Society (WCS) says Sanderson's annual salary has been "frozen" at $506,000 since January, 2007 and that the $100,000+ in additional compensation reported for him in 2008 does not constitute a "raise" since it amounted to benefits outside of his salary. Pablo Eisenberg, Senior Fellow at Georgetown University Public Policy Institute, says that some non-profits where executive pay has come under scrutiny have turned to fattening compensating with bonuses, expense accounts, deferred compensation and pension packages. In Sanderson's case, his 2008 benefits and expense account total more than $434,000 - bringing his compensation to the reported $938,119.

WCS also provided these details:

"None of Dr. Sanderson's salary is funded by taxpayers or private donations. It is funded by earned income (e.g., income from the endowment and attendance fees)."

"Wildlife Conservation Society reported a $79,000 increase in Dr. Sanderson's non-cash compensation from 07 to 08 (but) in reality, Dr. Sanderson will never see that $79,000 because those dollars are the taxes paid directly to the government on housing owned by WCS… Dr. Sanderson does not own this apartment and must live in it as part of his agreement with WCS so he is centrally located to all of WCS's facilities. The rest of the increase… was in rising health, dental, and life insurance costs, along with pension costs and the costs of operating an automobile as gas prices skyrocket."

"The Wildlife Conservation Society has received the highest rating of Four Stars from the watch dog group, Charity Navigator, the standard when evaluating non-profits. WCS beats industry standards on accounting practices and only 13 percent of funds raised go to administrative costs. The rest goes to programs."

[MaryDixonWCS]

This report on CBS Evening News with Katie Couric November 17, 2009, is an example of irresponsible journalism and is definitely not fair and balanced.

The story attacks an honorable non-profit, the Wildlife Conservation Society, which has an A rating by the American Institute of Philanthropy and gets top ratings from watchdogs, Charity Navigator and Guidestar. (These ratings were not mentioned in the on-air story.)

There was no attempt to speak to WCS in advance of the story, and since the report aired, CBS has not allowed WCS to respond without additional unfair editorializing, on the part of CBS, posted on its website.

For example, CBS added information to its online report and makes a suggestion that WCS has fattened the expense account of its CEO. The CEO does not even have an expense account. (They could have called to confirm this but did not.)

The facts:

Steven Sanderson has not gotten a $100,000 raise as reported in this story. His salary is $506,000. That has been his salary since January, 2007, and is on par with major New York City institutions.

Dr. Sanderson runs six organizations: a global conservation organization with more than 3,000 employees in 65 countries and four zoos and one aquarium in New York City. The CBS story completely ignores the scope of WCS global programs (e.g, managing 200 million acres of protected lands) and the size of WCS.

While attempting to sway viewers that there is something inherently dishonest about non-profits, CBS failed on-air to mention Dr. Sanderson's salary is not funded by taxpayers or private donations. It is funded by earned income (e.g., income from an endowment).

Why all the confusion and mistakes? The CBS report glosses over the difference between salary and compensation, and CBS researchers did not use information in the footnotes in an IRS filing. Ignoring footnotes can lead to telling just a part of the story and getting the facts wrong. The footnotes are there for a reason.

CBS reported Dr. Sanderson received a raise because, for example, the costs for his health, dental and life insurance had increased. To most any employee, that is not a raise.

Further, CBS includes a $79,000 tax bill WCS pays to the government for a WCS property in New York, as part of Dr. Sanderson's raise and compensation. This tax bill is paid for an apartment where WCS does business and Dr. Sanderson is mandated to live in as part of his contract.

Bottom line: The story incorrectly communicated information from the WCS IRS 990's by leaving out a lot of information that would have accurately explained the facts; and CBS never bothered to do any interviews or even contact WCS as the story was developed.

--Mary Dixon, Wildlife Conservation Society, VP of Communications

[mhonion]

Thank you Ms. Couric for the story on non-profit CEO compensation. I feel it is a legitimate area of concern. Let me suggest another story related to non-profits - that of expense ratio (i.e. what percent of their revenues go to admin and fundraising vs. program). Many non-profits simply misreport this information in order to show an artificially low expense ratio. Every donor likes to hear that the organization they're donating to uses their money efficiently. It takes only a brief review of non-profit tax form 990's to see the problem. A surprising number of non-profits show virtually no admin and fundraising expense. Many bend the rules liberally in order to classify expenses as program instead of admin or fundraising. There's a clear issue of integrity here. I also ask myself, where are the auditors who should be putting a stop to this. A functional expense breakdown is a required schedule in any non-profit audit; yet my experience is that auditors pay little or no attention to the schedule non-profits prepare of their functional expense breakdown. I'm a finance director of a non-profit who struggles to keep our expense ratio below 15%, while I see many other non-profits with lower ratios that many times simply do not pass anybodies reasonableness test.

[luellamc]

I was not at all surprised at the amount of the commensation for these non-profit agencies. I held a position at a not for profit pension manager organization for almost 12 years and the salaries for the top excutives were out of this world. The CEO around 2003 was making $800,000 annually with a $300,000 bonus. I am no longer employed there; but with the bad economy I understand from acquitances that the top people are still pulling in the big money and they have stopped putting in matching funds in the employees 401(k) plan. I guess not for profit means that the little guy does not profit.

[72StPaul]

Thank you Katie Couric, who makes at least $4 million a year for researching and reporting on people who make an honest living leading large, complex organizations that are in business to help people, our environment, our communities and our children. Did you take a pay cut last year?

Now, why don't you turn your attention back downtown and look at the people (again) making 7 figure bonuses creating nothing of any societal value, and who have led us to the brink of bankruptcy as a nation.

Yes, some non-profit leaders are paid well (although nothing compared to their for-profit counterparts). And guess what, some of them deserve every penny, and maybe more.

In a world that is just, dedicating your life to advancing a mission based organization doesn't mean taking a vow of poverty.

Now, why don't you look at your own values Ms. Couric and see what contribution to society you've made over the past year, and whether you really want people comparing salaries...

[msmurphy]

Thanks, CBS, for your impeccable timing. In the midst of an economic downturn---and during holiday season, no less--you have made the "responsible" decision to run a negative story about charities. When will you realize that the harm you do to the efficiently-run organizations far outweighs the supposed "good" you do in informing an already-cynical public about one bad apple. Not all organizations are run by liars, cheats, and embezzlers. Not even all United Ways, though you make it seem so. Some perspective, please! Many, many non-profits are efficiently managed by dedicated personnel who could make much more money in the private sector, but have chosen to help others.
Yes, there are some crooks out there---just not around every tree, as you would have us believe.

[squeallyk]

Perspective? CBS is not asking people to "believe" that there are crooks around every tree - merely trying to put people on notice to be INFORMED about a charity before signing away a donation check. Certainly, you do not object to the "perspective" of making informed decisions? You think it would be more "responsible" for people to donate to charities without any knowledge of how they run the organization or what they do with the money?

This report was unbiased. CBS provided info on some 'problem' charities/branches across the spectrum, provided info that NOT ALL charities are problems, and - in two different places in the article - provided links to a "Charity Navigator" which reports how different charities use their donations and income.

Not everything in life is about you and your personal causes, nor was this article a personal attack on you or a directed attack on the United Way. In fact, the article praises the new UW central coordinator for FIXING past problems.

Get over your own hangups and read the entire article with some real perspective before you blast CBS for reporting legitimate and useful news. From your sensitivity, it is clear that you either work for, raise funds for, or support United Way or some similar organization.

[fiorellastarr]

I agree. I once worked for a non-profit and they severely underpaid their staff except for the CEO and a few other high level executives that didn't seem to do all that much. When times got tough, their tactic was always to eliminate some of the underpaid personnel. They also get together once or twice a year for fully paid seminars in different parts of the country which they would extend into some personal vacation time. I would never give a dime to that organization.

[mariak15222]

Awful, Awful CBS! There SOOOO many other fingers to point during this recession.

Shame on ANYONE taking advantage of a non profit for their own gains BUT non profits need quality employees, most of which are not looking to get rich!

Donations were down approx 12% in the US last year with demands for social services increasing daily! There are many in our country who cannot make ends meet and even more who will go with out help now that this story has aired!

[ElizabethDC]

That's right, mariak15222. Some of these nonprofit CEOs (and nonprofit staff in general) could make much MUCH more money in the private sector. But they choose to serve the public in the nonprofit sector. It's unfair and unrealistic for people to expect charities to be effective without effective staffs. And effective people tend to want some sort of reasonable compensation for their talents.

[jbeaversinthenews]

Hi Maria --
I agree with you in that this situation is just AWFUL! Although this type of negativity is going to have some type of affect on future donations, the story still needed to be reported. This type of dishonesty cannot be swept under a rug. The United Way relies heavily and is supported heavily by the donations of thousands of people each year. The light should shine bright on their present AND PAST behaviors. This is not the first time this organization has been called on the carpet for their "greed". People have a right to know.
If we keep exposing them, maybe they will get their acts together and operate honestly or be forced to move over for those organizations that really have the "people" at the heart of their concerns.

[ElizabethDC]

Disclaimer: I don't work for WCS, I am not a CEO, but I do work in the nonprofit sector and feel compelled to comment.

One aspect these CEO compensation "exposee" articles always fail to mention is that the percentage of compensation should be compared with the charity?s overall expenses/revenue.

As of their ?07 audit anyway, Wildlife Conservation Society's CEO's (Dr. Sanderson) compensation was a very reasonable .34% of WCS?s overall expenses.

According to Guidestar, WCS increased its overall total assets by more than $4 million from ?07 to ?08. So perhaps their board of directors thought the CEO increase / bonus was well-merited?

What?s somewhat curious though is this:

According to Charity Navigator, Sanderson was making $628,642 as of the 06/07 fiscal year (have to assume that included bonuses).

According to Guidestar, he was making $503,927 for the FY ending June ?08.

So I?m wondering where the compensation figure reported in the CBS piece ($938,000) came from. That?s quite an increase, even with the $100K bonus. Have to wonder if it?s accurate.

The good news: anyone who clicks-thru to Charity Navigator and looks up WCS will discover that WCS holds a 4-star rating ? the highest ? for fiscal responsibility and efficiency.

[Phxfire]

Shame on CBS for leaving people to believe that most non-profits are suspicious. I read how people aren't giving to any charity instead of doing homework and finding deserving organizations. Shame on the people, too.

[vancouverboo]

Other than the Salvation Army and the local missions you have to be pretty stupid to give anything to an organized charity. They're nothing but money making enterprises. Some people have figured out how to live very well without having to work for a living.