Despite Slump, Nonprofits Still Give Raises

Despite an average 78 percent drop in profits, due largely to lousy performance of investment portfolios, the country's major nonprofits raised the pay of their highest-paid employee — usually the boss — by 8.5 percent.

The data comes from the annual Forbes survey of 200 major charities. While publicly traded companies in the United States must make quarterly financial reports within 45 days of an accounting period's close and an annual report within 90 days, nonprofits need to issue numbers just once a year, and this data can be a year or more out of date. The Forbes survey covered their latest fiscal years, but these periods generally ended sometime during 2001 and, in a few cases, in 2000.

The average top salary was $319,180, up from the previous year's $294,221.

The highest paid person listed was Gail L. Warden, head of the Henry Ford Health System in Detroit. She reported $2,128,412 in salary and benefits. Next was Floyd D. Loop, the top person at the Cleveland Clinic Foundation, at $1,673,752, followed by Michael Hoover, an executive with the Irving, Texas-based Boy Scouts of America, at $1,525,473.

The other $1 million-plus top salaries were Harold Varmus, chief executive of Memorial Sloan-Kettering Center in New York, $1,612,709, and Joseph Volpe, the longtime general manager of the Metropolitan Opera Association, also in New York, $1,057,000.

Funding the Arts

Outside of hospitals, the next top salaries were Leonard Slatkin, music director of the National Symphony at the John F. Kennedy Center for the Performing Arts, Washington, D.C., $911,989; Philippe de Montebello, director of the Metropolitan Museum of Art, New York, $854,055; Peter C. Marzio, director of the Museum of Fine Arts, Houston, $706,950; and Lawrence Small, head of the Smithsonian Institution, Washington, D.C., $670,911.

Among the more traditional cause-focused nonprofits, Peter Van Etten, chief executive officer of the Juvenile Diabetes Research Foundation International, New York, reported $580,632, and Robert J. Beall, of the Cystic Fibrosis Foundation, Bethesda, Md., $560,619.

At the other end of the spectrum, Nolan Byler, head of the Berlin, Ohio-based Christian Aid Ministries, reported taking no compensation.

The correlation between nonprofit size and the boss's compensation was not always apparent. By far, the largest nonprofit on the list is the Baltimore-based Lutheran Services in America, with total revenue of $7.7 billion. Yet the top reported salary, to former CEO Joanne Negstad, was only $99,444.

The average nonprofit received 12 percent more in donations, but spent 18 percent more in fund-raising costs.

Surpluses Decline

For each nonprofit, Forbes calculates three efficiency ratios. Charitable commitment, the amount of total expenses not spent on management and fund raising, remained unchanged at 84 percent.

Fund-raising efficiency, or how much private support is left after subtracting fund-raising costs, was also the same, 89 percent. From a donor's standpoint, Forbes recommends avoiding — or at least taking a close look at — nonprofits whose fund-raising efficiency is below 70 percent. This year there are three: American Bible Society, New York, and Veterans of Foreign Wars of the U.S., Kansas City, Mo., both 67 percent, and the U.S. Olympic Committee, Colorado Springs, Colo., 69 percent.

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