Wednesday, December 19, 2007
Nonprofit Salaries and Transparency
Posted by: lain // Category: Good Questions, Nonprofit Management, Technological Advances, Very Serious Posts With No Funny Business // 11:05 am
This morning the AJC reports that former United Way executive Mark O’Connell receives over $100,000 a year in retirement, plus a lump sum payout of $1.6 million.
‘Tis the season, I suppose, for journalists and donors alike.
Just last week the Wall Street Journal had a section devoted to philanthropy. The primary article, How Charities Can Make Themselves More Open, discusses why and how nonprofit organizations should report their financial information to the public.
It’s time to make sure our gifts are being used as intelligently as possible. Instead of showering hard-earned dollars on charities and hoping for the best, we need to demand clear, detailed information on the results of their efforts. We ask the government and public corporations to be transparent and accountable. Charities should meet the same standard.
According to that logic, however, O’Connell probably should receive a large payout. After all, the Atlanta United Way is one of the largest in the nation, and large public corporations often give ridiculous payouts to their executives.
In the spirit of transparency, the United Way website has been Johnny-on-the-spot, with two .pdfs front and center explaining Mr. O’Connell’s retirement package. Good work.
This issue looks tough on paper. Throw out the words “$1.6 million” and that’s a lot of money to almost everyone. Though when you’re raising over $1 billion dollars, I guess it’s a little easier to see why this may not be so ridiculous.
At the center of the problem lies the difference between businesses and nonprofit organizations who compete from the same pool of talent. Nonprofits don’t just respond to their customers or their shareholders, they must respond to the entire community. That’s a heck of a lot more people wagging their fingers at you.
What’s worse, having to pay a couple million up front for an effective executive? Or risking the loss of hundreds of millions of dollars because you didn’t hire the right person?
So, how can someone like the United Way avoid front page news like this at a time when they’re expecting a lot of end-of-year donations?
I think there’s a solution, and it’s called transparency through technology. Specifically, social media (like this blog) is a great way to expose your weaknesses and strengths. Even better, social media allows you to do so before anyone else can.
The folks at What a Concept! know this better than anyone, and their latest blog post about belief in one’s business is particularly timely.
Being up front, honest, and public about your business (and especially your nonprofit!) is so crucial because folks are going to find out about it eventually. And they’re going to gossip about it before they do. There’s just too much information and chatter on the internet already not to enter the fray.
By publishing your own strengths and weaknesses, not only do you keep your constituents informed and safeguard yourself against criticism, but you also establish a trust with your readers. Heck, maybe they’d go to bat for you when they wake up to read your retirement package is front page news.
Since I work for a nonprofit at an “executive” position (ha), I don’t feel weird about telling folks my salary ($36,000*) or how we spend our money. It’s kind of our debt to the citizens of this state, something a regular business doesn’t have. In fact, after our fiscal year ends later this month, we plan to publish our financial information online so you can easily see how we’ve spent our money.
In the mean time, you’re just going to have to trust me. But please don’t get your hopes up–we spend way more than 9% on operating costs. Not everyone’s as efficient as the United Way.
* as for benefits, I get a free Marta card, though usually I forget.
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I am glad you enjoyed the Miracle on 34th Street post. I have been thinking about that connection for a long time.