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Do executives in the nonprofit sector earn too much

by Ian Buchanan

Created on: March 15, 2008

I've been around the not-for-profit sector for a long time, and in the aggregate the answer is yes, and no. The topic is too broad to cover many instances, but I have a few examples that separate the variations on the theme.

The not-for-profit sector includes the local food bank to a major research hospital. Yes, most hospitals are run for profit, but there are a few that rely on public subsidy, and large grants, to pursue their specialization. It clearly takes a very different skill set and commitment level to run a hospital rather than manage a food bank.

There are hundreds of not-for-profit organizations in between, and the circumstances of each determines who in compensated and by how much. Many that involve part time work for minor organization may not be able to afford paid staff, but they should always have insurance in the event of accident or property damage to protect volunteers and clients.

Two aspects of not-for-profit should be understood, first that they are filled mostly with volunteers, not necessarily selected, and second, most charities have to do the best they can with the donations they get. Most small local charities are entirely run by unpaid volunteers, although most mission workers get a small stipend of some sort, so they themselves are not destitute.

I was on the board of a downtown business ministry for some years. Local businesses were encouraged to donate so we could hire a Chaplain who had business experience, and who was on call to even the most senior executive, one on one. The Chaplain and the secretary were the only paid employees, each at comparative levels to their experience in their profession. These people ran work time programs for about 250 people from Monday to Friday with the help of dedicated volunteers.

As often happens in business ministry, the Chaplain found it difficult in the business environment and eventually resigned. I happened to be a minister, although I worked as a full time senior executive in a large company. I had been looking at a career change anyway so was happy to become the interim, unpaid Chaplain for almost two years. The catch was that they were broke and only had enough money to pay the secretary. The problem was that the board, myself excepted, had assumed contributors would automatically write checks whenever we needed money. Unfortunately this scenario happened during an economic downturn, and the Chaplaincy only survived because of generous donations from a few well known philanthropists.

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