The New York Times had a good story yesterday on the head of the Boys and Girls Club of America helping herself to a $1 million/year salary. Roxanne Spillett said that she’d worked there for 32 years (so she might have siphoned off a total of nearly $32 million!) and, most distressingly, had “never been motivated by a dime, not for a single minute”. So we know that the board should not have been paying her 40X the median American salary in order to motivate her. Could the board have decided to pay Ms. Spillett all of that money so that she wouldn’t jump to a competing non-profit organization? Apparently not, because the article notes that Ms. Spillett was “close to retiring”.
Could it be the high cost of living in Atlanta, Georgia, where the organization is based? Perhaps. The board decided to pay at least eight employees more than $200,000 per year (I grabbed the Form 990 from Guidestar.org).
Could it be that Ms. Spillett did an exceptionally good job during the 2008 fiscal year? Revenues fell about 20 percent and what had been a $30 million profit turned into a $15 million loss. Total assets fell by 25 percent. Was 2008 an unusually tough year? Revenue was about 40 percent higher in 2006 than in 2008, so the trend was down each year for which a Form 990 is available. How about Ms. Spillett’s paycheck? It was also close to $1 million in 2006.
The organization does pretty well by getting government contracts and not paying taxes, so arguably Ms. Spillett has earned her $1 million per year. But you could say the same for Lockheed-Martin and they are gracious enough not to hassle us with requests for donations.
The Politburo down on Capitol Hill seems to be in an active mood these days and passing a lot of new laws. How about one that says any non-profit organization whose executives earn more than 10X the median American wage must start all telephone and direct mail solicitations with “We’d like you to help pay our CEO $X million per year.”
I started checking Form 990s after you mentioned them in your article on Haiti relief flights, that was very helpful information indeed. I advised my wife to stop unpaid volunteering for an organization that pays its director $400K a year, and put that effort instead into a group that doesn’t think well-ordered charity starts at home.
it is time to provide readers a link to yr analysis of npr and its fundraising. I am glad to see that RIGHT NOW wgbh is having its auction on line. Not using up valuable air time and it seems to be streamlining its on air solicitations, encouraging people to treat it like siriusn xm radio and to subscribe. (im an underwriter)
Two brick and mortar institutions exist in my neighborhood, the boys and girls club and the YMCA. The YMCA offers lessons for kids (avg. $6/hr) and discourages leaving your kids their unsupervised. The boys and girls club will watch your kids all day for an annual membership fee of $150. The fee is waived for low income people.
I don’t understand why her salary is so high, but the institution itself is often the only institution left where kids can play all day without their parents being gouged. As such, its irreplaceable.
I guess “non-profits” are where failed board schmoozers end up. I’ve helped with a non-profit in your neighborhood in Boston. Superficially the benefit was to help underprivileged kids but at its core it was a self-serving. Four live bands later, enough open bar alcohol that nearly 1/2 went unused (!!!) and the benefit just barely broke even. Talk about tax escapes.
The lesson of this era is: don’t give your money to someone else to decide what to do with it if you have a choice. Government, Wall St., banks, real estate, and even non-profits are on the short list. The free market and consumer is impotent to change a wrong to a right . Isn’t that when a new law should be made?
At what point does the “non-profit” (I can’t bring myself to use the word “charity”–that would only be appropriate for the people who make gifts to the organization) stop being a private organization in the service of the public for some greater good and start being an enterprise that uses charitable giving and a public face of charitable mission to support a very lavishly-paid management? When it hires professional advertising agencies and consultants to enhance fundsraising? When it pays senior staff salaries and bonuses that could only be seen as extraordinary, regardless of the tax-status of the organization?
I work in private-practice medicine. I am not complaining of my lot at all, but I can’t help but observe how well the large non-profit sector has managed to grow and amass what could only be considered extraordinary wealth, especially for organizations that enjoy greatly tax-favored status. The large university-based hospital organizations (I like to give the University of Pittsburgh Medical Center as an example, but there are many others) can command utterly their operating markets. They can buy any building and equipment they want, hire any staff they want, pay huge bonuses to executives, advertise as much as they want, employ rafts of lawyers to ensure that their treatment by insurance companies and the government is not worse (probably a lot better) than the smaller, less tax-favored companies around them. The proof burden for non-profit qualification appears light, and the only difference between these enterprises and a public company is that they don’t have to pay taxes or share their wealth with stockholders.