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Aiding the poor shouldn't make you rich

Everyone knows that Wall Street financiers and the nation's corps of CEOs are paid too much. We see CEO pay at 275 times that of average workers, and executives on Wall Street awarded seven-figure bonuses even when their investment firms are dead men walking, and we wonder what planet they're on.

But what has been bothering me recently as the economy has soured and more people are in need of charitable services, is the pay of a different sort of CEO. The people who run many of our nonprofits, such as hospitals, educational institutions and social service charities, are also being hugely overpaid.

These leaders run organizations that reap substantial tax savings because they engage in socially valuable enterprises. But too many of the dollars they raise seem to be going into their own pockets.

The Wall Street Journal had an eye-opening report last year that detailed the pay packages for nonprofit hospital executives.

In fiscal 2006, the University of Pittsburgh Medical Center paid its CEO Jeffrey Romoff, $3.3 million. He also received $36,995 for a car allowance and other sundries.

The former CEO of Chicago's nonprofit Northwestern Memorial hospital, Gary Mecklenburg, was paid $5.45 million in salary, bonus and deferred compensation in fiscal 2006. When he retired that year he received an added $10.95 million.

Pay packages of $500,000 to over a million for nonprofit hospital CEOs in the Tampa Bay area are not atypical. Here are some numbers for 2006: $1.4 million to Steve Mason of BayCare Health Systems, $1.3 million to Ron Hytoff of Tampa General Hospital, $1.1 million to Gary Carnes of All Children's and $777,000 to Sue Brody of Bayfront Medical Center.

Which leads me to the obvious question: Why are taxpayers giving tax exemptions and direct subsidies to institutions that pay their executives stratospheric amounts?

Every year I sit in editorial board meetings in which CEOs of nonprofit hospitals come to press their case for more public money. They want taxpayers — bus drivers, small business owners and public school teachers — to send them more to cover the hospital's charity cases.

And every year I can't help but think: Before you come asking for more public money, you need to reassess your own remuneration.

Until top salaries are more in line with, say, that of a U.S. Supreme Court justice, a position that pays $208,100 and has no trouble attracting top talent, the poor-mouthing is a little too self-serving.

But it is not just hospital CEOs who receive lucrative tax breaks. An annual survey by Professionals for Nonprofits found that in New York City, charities with the largest budgets are paying their CEOs between $280,000 and $350,000 without counting benefits, which tend to be generous.

Last year, Gloria Pace King was forced from her post as president of the United Way of the Central Carolinas after it became public that she received $1.2 million in salary and benefits in fiscal 2007. The United Way claimed it was an aberration, but top executives in other cities earn hundreds of thousands of dollars. Harve Mogul, president and CEO of United Way of Miami-Dade, was paid more than $600,000 in 2007, not including benefits.

When your job is to raise money for food pantries, domestic violence shelters and senior citizen services; when you ask people making middle-class incomes to donate out of their weekly paychecks, should you really be making more than a Supreme Court justice?

Republican Sen. Chuck Grassley of Iowa has been trying to shine a light on the excesses of nonprofits. He's been a pretty lonely voice until now. Maybe what we need is a cap on nonprofit executive pay as a condition of their tax exemption, the way we are insisting that Wall Street get religion in return for government bailouts.

When someone goes into nonprofit work it is to contribute to society. That sense of fulfillment is supposed to compensate for a pay rate that is relatively modest. But that ethic has largely disappeared, and in its wake are nonprofit executives getting rich while donors and taxpayers pony up. Just another group enjoying the delights of Planet Greed.

Aiding the poor shouldn't make you rich 04/18/09 [Last modified: Saturday, April 18, 2009 4:30am]

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