Fundraising for U.S. charitable organizations is proving to be a highly lucrative profession, at least for those at the top of their game, with some executives at top nonprofits earning more than $1 million a year, according to a new study by the Chronicle of Philanthropy.
The seven-figure paychecks are likely to rekindle debates over just how aggressive nonprofit charities should be in keeping and retaining top talent. While the nonprofit industry often argues that executive salaries should be comparable to those paid in the for-profit sector, critics say the special mission and tax-exempt status of nonprofits should dissuade them from the race-to-the-top mentality that has fostered the expansive CEO-to-worker pay gap often seen at Fortune 500 companies.
“There is a lot of blowback from people who think that compensation has gotten a little too generous at the top of the scale,” said Alex Daniels, a staff writer at the Chronicle of Philanthropy and one of the study’s authors. “But on the other hand, a lot of these executives have dozens of people working under them, and deal with complex donor issues and technology issues. A lot of folks on the other side say these executives will go to the for-profit sector where they can make even more.”
For the study, Daniels -- along with researchers Holly Hall and Anu Narayanswamy -- looked at 2011 tax records for about 280 U.S. nonprofits, examining base compensation and bonuses for the organizations’ chief development officials, known as “rainmakers” in the nonprofit world. The researchers found that no less than 20 fundraising executives made more than $550,000 in 2011, and two executives topped the $1 million mark. In many cases, the researchers noted, compensation more than doubled when mega bonuses were factored in.
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Topping the list was Anne McSweeney, campaign director Memorial Sloan-Kettering Cancer Center in New York, who received $1.2 million in base compensation and bonus pay in 2011. Susan Feagin, then a development executive for Columbia University, wasn’t far behind, taking home just over $1 million. Third on the list is Daniel Forman, vice president of development for Yeshiva University, who took home $922,542. Rounding out the top 10 was Chardiet Armando, philanthropy institutional relations chair at the Cleveland Clinic Foundation, who took home $677,906.
Daniels said the amount of money each executive helped raise varied widely (for instance, Yeshiva University received $102.3 million in private donations in 2011, while Columbia received over $1 billion that year). But among the top 15 executives on the list, the person with the highest salary-to-funds-raised ratio was Kathleen Kane, chief philanthropy officer at City of Hope, a cancer institute in Duarte, Calif., which received $81.8 million in private donations in 2011 while paying Kane a salary and bonus of $844,491. That means for every $1 million in donations the institute received, $10,327 went into Kane’s pocket.
Is that too much? While Daniels said he only reports the numbers and doesn’t weigh in on their appropriateness, he admits that some insiders have taken the view that there’s something obscene about people becoming millionaires while raising money for public charities. Speaking to Daniels, Ken Berger, president of the nonprofit watchdog Charity Navigator, called the high salaries “problematic,” regardless of how much money an executive helps to bring in.
Since this is the first year that Chronicle of Philanthropy has collected data on fundraisers’ salaries, Daniels said it’s too soon to tell if the high salaries found in the study are part of a growing trend, or if the salaries are increasing faster than the rate of those in the for-profit sector. He said it’s clear, though, that many top nonprofits -- particularly educational and medical institutes -- place a lot of value on the very specialized skill of asking for cash. “In some cases,” he said, “a really great rainmaker is going to make somewhere close to what the CEO would make.”