Nonprofit executive compensation should be within a range that generously rewards the executive for meeting goals and a job well done while not taking away from the nonprofits ability to meet the needs that it serves. A good leader has not met the duties of the job if they spend extremely high amounts on travel and office supplies or personal equipment without fairly compensating their staff or while reducing benefits to the cause. When government funds are secured for a cause or people give to a charity, people often assume that the money is going directly to the cause. It is understandable that the charity has business expenses including staff compensation but there is something that doesn't feel right when you see leadership of the …show more content…
charity spending $5000 on a dinner for two or using private airplanes for travel; those types of expenses are not reasonable or customary for the average person. Standards that I would like to see set for nonprofit executive compensation is: • salary and expense accounts commensurate with financial goals • staff salary should not exceed 20-25 percent of total funds generated annually • a base salary with optional bonus incentives based on fund raising success and efficient planning efforts Nonprofit pay levels should take into consideration factors such as industry, geographical location and cost of living, the charity's budget, and the mission.
According to Charity Navigator (Are Nonprofit CEOs Overpaid?), certain industries pay more than others, specifically; an executive can earn more at an Educational charity rather than a Religious one. Geographical location typically reflects the variations in cost of living throughout the country. Naturally, charities with larger budgets can afford to provide higher compensation. The focus of an organization's mission can also have a significant impact on the amount of compensation available. The board of a nonprofit should have a documented policy for determining compensation and raises. While there are not very many charitable organization executives earning over $1 million dollars annually, it should still be of concern because such an amount is quite …show more content…
excessive. Managers of charitable organizations should not be considered as equivalent to managers of for profit organizations because their goals, missions, and revenue are often not in alignment. According to Forbes 50 largest U.S. charities list (Barrett, 2014), there are 18 that have revenue over $1 billion dollars annually and their highest compensations vary greatly. Lutheran Services in America generates the highest at $21 billion dollars yet pays its’ highest compensation at $181 thousand dollars while Goodwill Industries International earns $5 billion and pays over $637 thousand in compensation. In contrast, Walmart ranks number one on the Fortune 500 list (Fortune 500) with over $485 billion dollars in revenue and pays the CEO $25 million (Friedman, 2014). Exxon Mobil $100 billion dollars less yet compensates the CEO at $33 million (Chen, 2015). In terms of highest ranking, charities generate much less in revenue than their counterparts that work for corporations. Their duties may seem similar but they are led by completely different directives and their goal should be to operate for as little as possible so that they can realize much of their revenue to meet the needs of their cause. Nonprofit groups should behave as businesses following similar processes in accountability but they should not see themselves in the same way that a for-profit looks at its operations.
If nonprofits do not keep their goals focused and spend too much time trying to emulate big business, they will create unnecessary expenses and harm their support base as some donors may not continue to donate if funds appear to be misappropriated. High compensation does not guarantee an effective leader that will have dedication and commitment for the cause. If the compensation being considered is high enough that donors would be concerned or the board would be embarrassed if it made the news, then it is probably unjustifiably too high. It is important to attract the right candidate for leadership and the compensation plays a key role in that but it cannot be the most important
factor. I would not stop supporting my favorite charity because of the leader’s compensation package because I would need to consider more than just the amount. My opinion of the charity would depend on the revenue generated in recent years, the needs being met, the reputation of the executive and plans to improve operations among other questions that could help me determine the true value. However, if I were to find that the leader’s compensation included exorbitant meals and travel while they needed to reduce benefits and support staff, I would definitely discontinue my support. I would probably write several letters regarding my disapproval as well because I would want them to have a clear understanding of why they are losing my support.
Many people have begun to question how they use the money they raise. About 81% of their funds are put towards their programs and services, while more reputable charities are usually
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
Non-Profit organizations are a major mold in society in general, and they continue to help advance many of the social causes of our time. From the description, we know that employee and volunteer morale is quite low, and that is the fault of the senior management. In an organization, it is important that each individual knows that they are contributing to something larger than themselves. In many cases, employees seek to work somewhere where they can earn a living, but also where they can become a member of a team, and feel a sense of purpose. When they are not treated with respect or given the ability to make their own decisions, they lose engagement and become stagnant in their work. Volunteers look for much of the same thing; they are, after
The nonprofit sector in America is a reflection some of the foundational values that brought our nation into existence. Fundamentals, such as the idea that people can govern themselves and the belief that people should have the opportunity to make a difference by joining a like-minded group, have made America and its nonprofit sector what it is today. The American "civil society" is one that has been produced through generations of experiments with government policy, nonprofit organizations, private partnerships, and individuals who have asserted ideas and values. The future of the nonprofit sector will continue to be experimental in many ways. However, the increase of professional studies in nonprofit management and the greater expectation of its role in society is causing executives to look to more scientific methods of management.
Over the last 20 years, there has been a significant increase in nonprofit and nongovernment organizations (NGOs) in the United States. With the increase in organizations, also came an increase in scandals and in the 1990’s multiple nonprofit and nongovernment organizations lost the public’s trust due to misuse of funds, lavish spending, and improper advances to protected populations. These charity scandals not only hurt direct organization’s reputation, but also led to the mistrust of nonprofit and nongovernmental organizations as a whole (Sidel, 2005). To combat these reputations, NGOs and nonprofit organizations began to self-regulate through employing morally obligated and altruistic employees, accountability practices, and lastly through
Do athletes get overpaid? Is it fair that the average NFL player gets paid 1.9 million dollars a year while the average heart surgeon gets paid 533 thousand dollars annually? I think that professional athletes don’t get paid too much. There are multiple reasons that proves that their pay is not excessive. Their careers are short, they risk their body for our entertainment, and they motivate children.
This paper will discuss the reasons why CEOs are not being overpaid. It will apply the utilitarian ethical principle to many a few aspects to CEO compensation and whether or not it is justifiable for such pay. The paper will look at whether or not their performance is justifiable for the pay because they play such a big role in the livelihood of the company along with the principle agency theory and how it is being addressed for the benefit of the shareholders and others involved with the company, the supply and demand of the CEOs, and the paper will describe the comparison of other professions to help link the idea of CEOs being fairly compensated.
The spirit of nonprofit governance by an independent board of trustees appears to be severely strained in the case of Everglades College. According to records available from the Florida Division of Corporations, at the time that Dale Chynoweth was added to the board of directors, he was hardly “unrelated” to other board members, as he was partner with Arthur Keiser in at least one business (Spectrum Business Park Association). In the ensuing years, the two were business partners in multiple properties that are rented by Everglades College. Zev Helfer joined Arthur Keiser as a business partner (College Pathology Labs, Inc.) just months before being named as an added “unrelated” director of Everglades College, Inc. James Waldman became a state
Nonprofits serve multiple roles in improving the quality of life (The Philadelphia Foundation)They are created and put in certain communities for different reasons pertaining to each situation and enhance the environment in that way. Think about it, when you drive through a community with lots of homeless people, what do you automatically think? It’s poor community, right? Well I do, and you never want someone to think poorly of the place you liv...
Throughout this course my paradigms of what a nonprofit organization have been challenged as we have considered the major aspects and leadership challenges of these organizations. Having worked with for profit and nonprofit organizations in the past I was quite confident that I had a clear understanding of the distinctions between the two. I had worked in organizations that regularly used volunteers to accomplish their mission and felt that the management of these processes were simplistic. Despite these misconceptions, I found that I was able to learn a tremendous amount through our reading, peer interactions, group projects and equally important, my volunteer service as part of this course.
I believe that U.S. executives are overpaid because much of their salary is also based on credits that they shouldn't have gotten. Even though they practice stealth wealth, they get huge compensations because of the interest when they retire. Many companies match these interest rates which overpays them more than they deserve. Also, the idea of having a law for CEO's makes my argument correct. While huge firms hire people to do over the phone sales overseas in countries such as India and China, these people get paid ridiculous amounts like $4.00 an hour.
They feel that they are doing the bulk of the job and manager get their compensation, but as a manager or CEO they have to do all the “behind the scene job” and oversee and delegate successful daily operation of the company. CEO’s provide or teach skills and talent that is required to produce the desired product or service and in this case, a strongly performing company. The skills and responsibilities that come with the job of CEO are extreme and the number of people who can fill these roles is limited. That is why the market has determined that people with these skills are worth a lot of money to their companies and is compensated to suit. I see the reasoning for the incentives and pay but when comparing $12.40 an hour which is $25,800 a year compared to Mike Duke’s salary of $1.3 million and total compensation was 18.1 million (Noe, 2013).
After reading the research and thinking some more about the topic I have decided to look at what leadership skills do nonprofit leaders need to succeed? This would give me the answers to the questions that I
In return the entity acquires expenses and depending on the entities financial position, then revenue is produced as a profit or loss (2014). As with most entities there should be guidelines in place to assist with minimizing breeches and mismanagement. EPIC is fairly small compared to other entities providing like services. However EPIC has a detailed policy and procedures manual which address ethical consideration. In EPIC’s policy manual section titled “Code of Ethics”, it addresses topics related to conflicts of interests, financial considerations to safety in the workplace. One aspect/benefit of nonprofit is there able to operate with a tax exemption status.
In nonprofit organizations, the monetary support provided is not always directly related to the service provided, as patrons are not directly charged for services. So the success is measured by the quality of economically costed services.