Some professional fundraisers who apparently don’t subscribe to the government’s “do not call” registry, called me at home this morning, asking me to help out the American Lung Association. This led to over to guidestar.org to find out how much these particular do-gooders are paid for doing good.
The most recent Form 990 was for the year ended June 30, 2009 and it was a tough year for the enterprise, with revenues down about 10 percent. Fortunately, it wasn’t such a bad year for employees. Bernadette Toomey paid herself $466,000 (a raise of about $75,000 over the previous year; I thought maybe her high salary was because the job required a medical degree (a practicing pulmonologist in NYC would earn about $196,000), but a Google search reveals that Ms. Toomey has a “a Bachelor of Arts in Communications from Marymount Manhattan College and a Masters in Adult Education from American University”). Joseph Bergen clocked in at $357,000 (he left early in the year apparently, and the majority of his cash was $201,000 in severance pay). Charles D. Connor collected $303,000. Kim A. Schwartz raked off $250,000.
I think it would be nice if we could augment the do not call registries with our personal incomes. Then we could check a box “Do not call me if your employees earn more than I do.”
Philip – Love the snark. For what it’s worth, Charity Navigator gives the American Lung Association five stars, and notes that Toomey’s salary constitutes 3/4 of 1% of the organization’s expenses:
http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=3274
Thanks, Jonathan. I’m glad to know that I can ignore phone calls from other charities rated five stars. If 0.75% of expenses is ipso facto a reasonable compensation for a CEO, Barack Obama is definitely due for a raise. He should be earning $27 billion per year on the federal government’s $3.6 trillion annual spend. Even if you cut him back to 0.75% of revenue ($2 trillion; we have a $1.6 trillion deficit), that’s a comfortable $15 billion per year.
[I hope that you’re not going to suggest that Obama is not entitled to the same 0.75% as Ms. Toomey with her Masters in Adult Ed. Aside from his Harvard Law School degree, Obama earned a Nobel prize.]
There are some folks in private industry who are underpaid too. Gary Kelly, CEO of Southwest Airlines, earned $1.6 million in 2009. That was on revenue of $10.35 billion. So his fair share (0.75%) was actually $77,625,000. Of course, it is not very challenging to manage 35,000 people operating 3,200 flights per day, so perhaps that explains why Southwest’s shareholders are so stingy with Mr. Kelly.
[I re-ran the numbers from the Form 990. Total revenue was $48 million for the American Lung Association. Ms. Toomey’s rake of $466,000 therefore constitutes 0.97% of revenue, not 0.75%. Ergo, Gary Kelly should have been paid $100 million/year and Barack Obama should be at $20 billion (based on revenue).]
I wish you would write seriously about this instead of just being snarky.
If you are the head of a large non-profit, or a city manager, you’re job is very similar to that of a CEO of a large corporation. So, should you be compensated like a CEO, or should you be obliged to work for the ethical and spritual rewards of helping the charity or the government?
It seems to me, that if we pursue the second option, we are going to get a lot of incompetent CEO’s running our non-profits. I know that you have a long list of incompetent CEO’s who made a lot of money like that guy at Home Depot, but that doesn’t change my point. Ms. Toomey made half a mil, not 40 mil in stock options.
The situation is similar to our refusal to pay Computer Science professors more than English professors at most universities. We feel that this would be unfair. While it would be unfair, it results in there being a lot of incompetent Computer Science professors. The competent ones go off and work in private industry, an option not available to the English professors.
Ms. Toomey is managing a big organization and evidently doing a pretty good job. Why shouldn’t she be well compensated for this?
Brian: I was not criticizing Ms. Toomey’s compensation, merely pointing out that it would make more sense for billionaires to fund the millionaire salaries of non-profit executives than for average citizens to do so. The CEOs of big companies might earn as much or more than Ms. Toomey, but they don’t call me up on Saturday morning asking me to make a donation to them.
If we’re on the subject of what people “deserve” to be paid, workers in the municipal water departments should get the highest compensation, since they save millions of Americans from cholera. If the U.S. can make the transition to a fully planned economy, perhaps these good folks will get what they deserve.
Meanwhile, in the shrinking portion of the U.S. that remains private, the traditional view is that salaries are set by the market. Is there any evidence that a competent CEO could be found for less than half a million dollars per year? Partners in Health had revenue of $150 million in 2010, triple what the American Lung Association took in. Instead of sitting in Manhattan making grants, Partners in Health’s 13,000 employees directly operated hospitals in clinics in regions of the world (e.g., Haiti, Rwanda, Peru) that exposed staff to tropical diseases and violence.
What did it cost Partners in Health to keep Ophelia Dahl on the job as CEO? The 2009 Form 990 says $86,610 for her 60 hours/week.
Is Ophelia Dahl doing as good a job as Ms. Toomey? Well, for starters, Ophelia Dahl isn’t calling up folks on the “do not call” registry on Saturday mornings asking them to help her with a pay raise. Ophelia Dahl has been able to retain fully trained medical doctors from the U.S. and Western Europe for less than $100,000 per year. Ophelia Dahl was able to take over an entire hospital system in Haiti on a few days’ notice following the big earthquake.
Aside from the American Lung Association’s shrinking revenue and fruitless phone solicitations of the comparatively poor (compared to their employees, that is), what evidence do you have for Ms. Toomey doing “a pretty good job”? And since when does the U.S. labor market typically pay someone with a master’s in adult ed doing “a pretty good job” $465,000 per year? Is that the miracle of the Obamaconomy that we’ve all been waiting for?
“Charities are not covered by the requirements of the national registry. However, if a third-party telemarketer is calling on behalf of a charity, a consumer may ask not to receive any more calls from, or on behalf of, that specific charity. If a third-party telemarketer calls again on behalf of that charity, the telemarketer may be subject to a fine of up to $16,000.”
http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt107.shtm
If you’re tired of donating money to pay for charity execs on multiples of your salary, why not check out Kiva? You can lend (not give) money directly to the entrepreneurs of your choice in a number of countries and know that you are helping them to grow their businesses instead of funding a self-perpetuating bureaucracy that has a direct interest in maintaining the problem it’s supposed to solve.
Stephen: Thanks for the suggestion. I have used Kiva and thought that I was lending money to small business owners in Latin America, but in fact I was not. See http://blogs.cgdev.org/open_book/2009/10/kiva-is-not-quite-what-it-seems.php for some of the issues with Kiva. Also there are the interest rates that can be as high as 80% per year (see http://www.huffingtonpost.com/elisabeth-rhyne/why-are-microfinance-inte_b_593359.html ). It isn’t clear why folks lending out money at a the cited median rate of 26 percent need free capital.
My friend Max is a commercially minded guy and he says that the best thing that we can do for poor countries is to buy their products when they’re willing to sell them at a competitive price. That is the only thing that will result in them having a sustainable economy in the long run. To that end, Americans should spend all of their time lobbying the Politburo to eliminate quotas, tariffs, and other restrictions on the importation of food. Right now the U.S. system is rigged in favor of wealthy land owners in the U.S. to the detriment of consumers as well as people in foreign countries.
On that note, the ceo for walmart is Mike Duke. Quick google search reveals total revenue last year of: 419 billion. One percent of that would be 4.19 billion for Mr. Duke so I guess he’s a super bargain at only 19.2 million (including restricted stock awards, etc etc). I know folks always complain about ceos and how much they’re paid–1000 times more than the average cashier! but my point is only that his job is probably at least 1000 times harder. (Figures from financial times, forbes magazine and guessing a cashier makes 19,200 yearly, which is just 10 bucks an hour times 36 hours times 52 weeks more or less).
Phil, thanks for the links. I have always been aware that my loans to Kiva “backfill” loans that they have already made, and thus free up funds for new loans; I don’t really have a problem with this. As an accountant I know that money is fungible, and the idea of lending a specific dollar to a specific person is a harmless fantasy I’m willing to overlook.
Microfinance has really high interest rates, because the loans are so small. The amount of admin required per loan remains pretty much the same whether the loan is for $10 or $10,000 so the admin costs must be covered by higher interest rates for the small loan. This is acceptable because the alternative is no loan at all, and the entrepreneur can use the loan to grow their business. If that happens, they should be able to borrow more and thus pay a lower interest percentage.
Kiva need free capital, even though they are lending at 26%, because without our capital they would need to borrow from commercial lenders, and would have to charge even more. So by lending to Kiva we are helping to reduce the interest burden of the borrowers.
Your friend is completely correct: the best thing for the third world would be the dismantling of trade barriers in the first world. Rich American and European farm corporations fleece consumers behind ridiculously high trade barriers while third world farmers can’t get access to the market because of these barriers. But consumers are disparate, and would gain only a few dollars each from trade liberalisation, so it’s hard to get them to lobby for change. The farm lobby stands to lose gigantic sums of money from change, so happily spends millions to ensure it doesn’t happen. (There’s also the misguided but popular notion that trade barriers protect jobs, which corporations happily exploit to keep them in place.)
So at a practical level, I would question your friend’s rationalisation of not helping where we can. It’s like the socialists who refuse to give to charity on the grounds that they are working for a complete transformation of society which will make charity unnecessary. Lending a few dollars a month at no interest is not much of a hardship for most of us. It might not transform the third world overnight but it helps people at a practical level to improve their lives by their own efforts.
Eric: If the CEO deserves 1000X more than the cashier because the job as 1000X harder, shouldn’t theoretical physicists and mathematics researchers get paid more than CEOs? As a shareholder in Walmart (through some Vanguard funds), I don’t want the board paying Mr. Duke more than is necessary to keep him at his desk (or to retain an equally qualified replacement). As noted in http://philip.greenspun.com/politics/economic-recovery , I think that our shoddy system of corporate governance for public companies, in which managers and their cronies on the board can so easily loot from shareholders, is a huge drag on U.S. economic growth. Walmart is probably an exception because on family owns so much of the stock and presumably keeps an eye on the cookie jar.
(Of course the problem of insider looting is even worse in non-profit organizations; the managers and the board can do pretty much whatever they want and there is no oversight until someone like http://en.wikipedia.org/wiki/Richard_Grasso loots out more than $100 million from a non-profit.)