Tuesday, May 13, 2014

Top fundraiser pay - how high is too high?

In catching up on my back issues of the Chronicle of Philanthropy, I came across some articles in the April 24 edition on pay and bonuses for top fundraisers at some of the largest nonprofits in America (Sorry, I can't link to it. It's subscriber-only content). At some of these organizations, particularly universities and hospitals, fundraiser pay has exceeded half a million and, in a few cases, one million.

Let me start by saying that I am not one of those top fundraisers!

There was one datapoint that really stood out for me:

At the University of Nebraska, the 2011 total compensation of the head football coach was $2.8 million. The total revenue brought in to the university from the football team was estimated at $55 million. Therefore, the compensation per $1 million in university revenue was $50,396.

At the same university, the top fundraiser's total compensation in 2011 was $221,083. The amount of private money raised that year (presumably not just by him, but by his entire team - the article doesn't clarify) was $172 million. His compensation per $1 million raised was $1,285.

Is this fair?
Is this a good business practice, in terms of employee retention?

Some of the top fundraisers profiled in the article are managing departments with 100+ staff, raising billions of dollars (yes, billions, in the case of institutions engaged in capital campaigns), overseeing complex data systems... and have decades of experience in negotiating complex, delicate transactions. Why would one of these top professionals be paid so much less than the football coach, or another staff position, when she/he is bringing in so much more revenue for the institution? It will cost the institution a lot of money to lose this top professional, so they should be incentivized to stay, right?

Well, maybe not so fast. These institutions that are kept afloat via donations. Should charitable contributions be used for these (relatively) high salaries? Should donors be made aware of this? And should they care?

(I don't know for sure if fundraisers' salaries are paid by donations or by tuition, health insurance reimbursements, etc. But it goes without saying that fundraising is a huge part of these institutions' revenues.)

The Chronicle article says that "although the bonuses may seem high, the total compensation of [those mentioned in the article] is less - in some cases much less - than 1 percent of the amount their organizations raise each year."

So, as a donor, should I be outraged that top fundraisers are making such high salaries at top nonprofit organizations, hospitals, universities, etc.? Or should I be applauding these institutions for investing in and retaining professionals who are so good at their jobs and are being compensated at such a small percentage of the revenues they bring in?

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