Big non-profit organizations have highly paid leaders

There is big money in running the USA's big non-profits.

CEO James Mongan of Partners HealthCare System, operator of non-profit hospitals in Boston, was the most highly compensated top executive in 2008 among those running the wealthiest foundations and charities that raise the most in donations.

Mongan, also a Harvard Medical School professor, was paid $3.4 million by Partners HealthCare, including nearly $1 million in deferred pay that was reported as a lump sum this year in accordance with IRS rules.

Museum of Modern Art director Glenn Lowry was No. 2 with 2008 compensation of $2.7 million, says The Chronicle of Philanthropy, which today releases its 17th annual pay rankings. Third was Steven Altschuler, CEO of Children's Hospital of Philadelphia, at $2.4 million.

"Partners HealthCare competes on a national stage for physician executives," and Mongan's pay "is in line with that of his national peers," says spokesman Rich Copp, who questioned the Chronicle's methodology. "We don't understand how Dr. Mongan could be No. 1 on this list when … data indicates that more than 15 non-profit hospital CEOs are more highly compensated."

Noelle Barton, manager of special projects for the Chronicle, says the ranking is of 325 of the largest and wealthiest charities and foundations and includes major private colleges, hospitals, museums and religious groups. About 1.3 million non-profits are required to report to the IRS, but the top 400 receive more than 25% of all private donations, and it's rare for a CEO of a smaller organization to be paid more than the leading non-profits' executives. However, Barton says some of the best paid may work for non-profits that receive the bulk of their funding from the government, and the Chronicle does not include those in its survey.

Donald Marron, chairman of the Museum of Modern Art compensation committee, says Lowry has "led MoMA through an intricate period of expansion and reinvention," that increased gallery space by 50%, attendance by 73% and membership fourfold.

Peggy Flynn, spokeswoman for Children's Hospital of Philadelphia, says Altschuler's compensation reflects accomplishments that have led it to be a leading pediatric hospital and research facility that has saved lives and tops rankings by U.S. News & World Report and Parents magazine.

The compensation published in USA TODAY is higher than published in the Chronicle to be consistent with compensation reported for corporate CEOs. For example, USA TODAY includes $693,000 for perks and benefits paid to Mongan. The median pay for top non-profit executives rose 7% in 2008 to $418,555, a fraction of the $7.6 million in median pay for S&P 500 CEOs in 2008, a USA TODAY analysis found.

But CEOs of non-profits do not escape public outrage over pay, and some donors are surprised to learn that leadership isn't voluntary, says Ken Berger, CEO of Charity Navigator, which evaluates charities. It released an examination of 5,448 charities in August, most smaller than those in the Chronicle's survey, and found the average CEO salary to be $158,075, up 6.1% from 2007.

Berger says the most frequent comment he hears goes: "I have been donating to this charity for years, and now that I see the salary of the CEO, I will never give them money again." Most salaries are warranted, Berger says, considering that non-profits are a $2 trillion slice of the economy that generate 10% of jobs.

Corporations often say CEO pay is high to retain talent that would otherwise be recruited away. Large non-profits offer the same defense. Flynn says Altschuler is routinely wooed, and in 2003 the Museum of Modern Art offered Lowry a $1 million retention bonus if he stayed until 2008. His 2008 compensation included that bonus, plus $336,000 in housing. Lowry is required to live in an apartment adjacent to the museum in Midtown Manhattan, paid for by the museum. He got a $200,000 bonus for his hand in raising more than $858 million for museum expansion.

CEOs and presidents are not always the best paid at their institutions. Yale University chief investment officer David Swensen made $4.4 million in 2008. His boss, Yale President Richard Levin, made $2 million. University of Southern California football coach Pete Carroll made $4.4 million. His boss, USC President Steven Sample, made $1.2 million.

The biggest compensation gainer among top executives was Franklin Graham of the Billy Graham Evangelistic Association, whose compensation rose 534% to $633,722, much of the gain because of a $366,000 retirement payment. Graham, 57, son of Billy Graham, also earns $483,000 as CEO of charity Samaritan's Purse.

Compensation increases are largely over going forward, Barton predicts. The economy has dealt a blow to contributions and investment portfolios. Altschuler will receive no salary increase in 2009. Lowry earned $833,582 in salary and bonus in the 2009 fiscal year that ended June 30, a voluntary cut of 15% below his contract with the museum.