Accepting Less

When Douglas F. Kridler, chief executive officer of the Columbus Foundation, helped prepare his organization’s 2009 budget last year, he recommended cutting his own $280,500 salary by 10 percent to help the organization weather the declining economy. Mr. Kridler said his board thought his suggestion was too steep and countered with a 2-percent reduction.

In March, as the stock market continued to erode, Mr. Kridler proposed that he take another 2-percent cut in pay as part of other additional cuts “to stay ahead of the curve.” The board agreed.

Taking pay reductions “is not heroic, it’s simple,” says Mr. Kridler. “I’m just doing my part to stop or slow this economic train before it hits my staff. Even if I’m paid below the mean salary for my position nationally, I was well paid before the self-imposed cuts and I’m still well paid.”

Top officials at numerous charities nationally have volunteered to reduce their pay to help their organizations cope with recession-induced budget shortfalls. In some cases, top executives donate a portion of their salary back to their charity, while others decline bonuses that are offered to them.

Other charities, however, have avoided pay cuts, arguing that top executives are underpaid and are now seeing their workload increase.

‘Was Only Right’

For executives who have taken voluntary reductions, they say their actions send an important message to employees, board members, donors, and the public — even if the cuts themselves may not be large enough to make a huge impact on the budget.

Michael Pastreich, chief executive officer of the Florida Orchestra, in St. Petersburg, says he is taking a voluntary cut of 10 percent of his $175,000 salary as the organization attempts to trim $800,000 from its budget of nearly $10-million.

In addition to other cost-cutting measures, three employees were laid off and staff members who earn more than $75,000 will see their salaries reduced by 7.5 percent; those who make between $50,000 and $75,000 will take a 5-percent cut; those who make less than $50,000 will face a pay freeze.

“It was only right that the people who could afford the cuts the most took the largest and the people who could least afford the cuts took the smallest,” says Mr. Pastreich. He acknowledges that his pay cut and the other steps aren’t a silver bullet that solves all his organization’s budget problems.

“The total effect of my salary reduction is a drop in the bucket,” he says. “But you find enough of those and they start to add up.”

John W. McCarter Jr., chief executive of the Field Museum, in Chicago, says he decided to take the largest pay cut at his charity — $90,000, or 20 percent of his $450,000 salary — during a budget crisis brought on by a declining endowment.

Mr. McCarter says his decision to cut his salary was seen by the museum’s board and employees “as a message that this is a serious situation. And I believe my pay cut made it somewhat easier for people who were taking a reduction to take that reduction.”

Kevin Bell, chief executive of the Lincoln Park Zoo, in Chicago, says he took a voluntary cut of 10 percent of his $352,500 salary as his charity faced the need to slice about $1.5-million from its $21-million budget because of endowment losses. Other senior staff members are taking a 5-percent pay reduction.

Increased Scrutiny

As the poor economy takes a toll, the public, politicians, and the news media are giving increased scrutiny to executive pay — and pay cuts.

For example, in New York, the media-gossip blog Gawker in June singled out Laura Walker, chief executive of New York’s public radio station WNYC, who earned $508,520 in pay and benefits in 2008. The writer, John Cook, asked whether Ms. Walker’s pay was justified, given that the station had just announced it was laying off four people, eliminating 11 unfilled positions, and reducing the pay of senior staff members.

Wrote Mr. Cook: “Just remember where the money is going the next time WNYC begs you to support the important work that they’re doing.”

After the Gawker blog item appeared, Jennifer Houlihan, a station spokeswoman, said Ms. Walker had volunteered before Mr. Cook’s comments to cut her compensation by 5 percent, retroactive to the beginning of July 2008, and would take a cut of at least that much throughout the 2010 fiscal year.

Mr. Cook has said he still believes that level of reduction is not enough.

The chairman of WNYC’s Board of Trustees, Herb Scannell, defended Ms. Walker’s compensation, saying in an e-mail message that “Laura Walker’s leadership over the last 13 years has been exemplary, as she transformed the station from a municipal-run station into an independent, multiplatform journalistic organization.”

CEO Job Is Harder Now

A national survey by the Forward newspaper of 21 of the largest Jewish organizations that have laid off workers over the past year showed that nine top executives have reduced their pay.

UJA-Federation of New York said it laid off 12.5 percent of its staff in March while keeping salaries of senior staff members at the previous year’s level. Senior executives “are working harder than ever, due to reduction in force,” the group’s board chair, Jerry Levin, told the newspaper. “It would not be appropriate for them to have any sort of salary reduction.”

For charity leaders who do volunteer for cuts, approaches vary.

One top executive in Minneapolis figured the best way to help her organization get through tough times was to simply donate a portion of her paycheck back to her employer.

Olga Viso, director of the Walker Art Center, says she decided last fall to contribute 6 percent of her salary and benefits to her organization in the 2009 fiscal year and 7 percent in 2010.

Ms. Viso, who was hired in January 2008, declined to give her salary, but the center’s most recent informational tax form shows she was paid more than $240,000 in salary and benefits for six months she worked in 2008.

Ms. Viso says she made the decision to contribute the money “when we really started to understand the slippage” in revenues. The center cut its budget from $21.3-million at the beginning of the 2009 fiscal year to $19.1-million for 2010.

Board members did not expect her move, she says, but “they very much respected my decision and understood it as an important sign of commitment and leadership that was important to me.”

Ms. Viso says she is not alone in the arts world in giving up some of her pay: “A lot of my colleagues have done it, even though it hasn’t been widely publicized.”

Another leader, the chief executive of the American Red Cross, Gail J. McGovern, declined a bonus that was due this year, says Jonathan Aiken, a spokesman for the charity. The Red Cross has also frozen all salaries through the 2010 fiscal year and suspended contributions to employees’ retirement plans.

‘Survival Mode’

Some charity leaders taking pay cuts now are concerned about how the cuts will affect future compensation levels.

When the Community Foundation of Southern Wisconsin, in Janesville, took steps last January to save money and avoid layoffs in part by requiring staff members to work 5 percent fewer hours, Sue Conley, its executive director, voluntarily cut her $72,800 salary by $10,000, or nearly 14 percent.

“We’re truly in survival mode now,” she says.

Before making the salary changes, she says, the charity had been trying to increase staff salaries because they were significantly lower than the median range for comparable positions.

“If I die tomorrow and they have to replace me, it might be difficult to do with a lower salary,” she says. “That’s why we were trying to get the salary up.”

Kyle Caldwell, chief executive of the Michigan Nonprofit Association, in Lansing, agrees nonprofit groups need to think about the impact that pay freezes or cuts will have on future recruitment efforts in better economic times.

He tells board members to record the salary and benefits they had recommended for a chief executive who voluntarily takes a pay cut. That way, he says, “when you have a vacancy, you have some sense of reality of what the compensation package ought to be versus what it is because of a voluntary reduction or decline of a raise.”

Mr. Caldwell’s board offered him a 1-percent increase in his salary of $125,000 for the 2010 fiscal year — the same increase the group was giving to other workers. But he and several other senior managers said no.

Tough Adjustments

Chief executives with compensation at levels large and small agree their voluntary pay cuts were painful.

Rebecca E. Ramirez, head of the Hope Family Health Center, in McAllen, Tex., which offers care for the uninsured and working poor, says the end of a county grant led her organization’s budget to drop from about $674,000 to about $500,000. The organization had to make changes, including closing its medical clinic one day a week and reducing salaries.

Working with her charity’s board and accountant, Ms. Ramirez says she volunteered to take a reduction in salary from about $62,000 to approximately $52,000 — a cut of 16 percent.

“It’s definitely affected my personal lifestyle. I’m not driving as much, trying to save up money and what have you,” she says. “It’s hard when you get used to making a certain amount of money.”

But, Ms. Ramirez says, “we work with people who have no insurance and have very little to no income, so I can put this into perspective and say, OK, I have a paycheck and I’m still making good money for the [Rio Grande] Valley.”

She adds: “It’s difficult, though. There’s no way of getting around that.”