Critics Slam Bonuses—Some Larger Than Base Pay—but Charities Say They Are Needed

Annual performance bonuses, long a controversial fixture in the corporate world, help some nonprofits retain top fundraisers. And the numbers are large enough to raise eyebrows.

Anne McSweeney, a fundraiser at Memorial Sloan Kettering Cancer Center, earned a $1-million bonus in 2009, bringing her total compensation to more than $1.4-million that year, according to data examined by The Chronicle.

Ms. McSweeney’s payout was followed by a $240,000 bonus in 2010; her total pay that year was $697,312.

In 2011, Ms. McSweeney again earned more than $1-million, with a bonus of $748,227, bringing her total compensation to $1.2-million. Another fundraiser with equivalent authority at Memorial Sloan Kettering, Richard Naum, earned a bonus of $441,592, bringing his total pay to $872,964.

“My first reaction was to be shocked,” says Penelope Burk, a fundraising consultant who learned about the bonuses in an interview. She said she wondered how the organization would explain the payments to people who support its work.

“You don’t get an hour to explain to donors why that is okay,” Ms. Burk notes.

Officials at the cancer center said the pay was appropriate.

Ms. McSweeney and Mr. Naum are “building a fundraising organization that will continue to generate strong results for many years to come,” Avice Meehan, the cancer center’s chief communications officer, wrote in an email to The Chronicle.

In particular, Ms. Meehan noted that the two fundraisers are directing a $3.5-billion campaign that has already raised $3.2-billion and is on track to meet its goal this year, two years ahead of schedule.

And, she noted, they lead a fundraising department that raises $2-million to $3-million for every member of its 130-person staff.

A fundraiser for another New York institution, Susan Feagin at Columbia University, was also the recipient of a big bonus. As with Ms. McSweeney and Mr. Naum, the bonus for Ms. Feagin was tied to a capital campaign.

Her $520,000 bonus doubled her 2011 salary to more than $1-million, making Ms. Feagin and Ms. McSweeney the only two fundraisers to top $1-million in total compensation that year, according to The Chronicle’s study.

Ms. Feagin’s bonus, according to a statement from the university, was a one-time payment for leading a campaign that reached its original $4-billion goal one year early, in 2010. The fundraising drive, which was extended until December 31, 2013, ultimately raised $6.1-billion.

Both Columbia and Memorial Sloan Kettering stated that they used compensation experts to help set the bonuses awarded to their top fundraisers.

Small Percentage

Although the bonuses may seem high, the total compensation of fundraisers like Ms. McSweeney, Mr. Naum, and Ms. Feagin is less—in some cases much less—than 1 percent of the amount their organizations raise every year.

Ms. McSweeney got $3,932 for each million dollars of the $308-million that the hospital raised in 2011.

One reason for big bonuses is that nonprofits often face restrictions on how much they can raise their employees’ salaries in any given year, says Steven Rum, vice president for development at Johns Hopkins Medicine.

“You cannot give 10-percent raises every year, you give 1.5 to 3 percent,” he says. “So a bonus is the way of rewarding them.”

Big Bonuses for Senior Fundraisers

Four of the five recipients of the largest bonuses were fundraisers at hospitals. Three people earned bonuses that exceeded their base salaries.

Note: Salary data are from calendar year 2011.

* Susan Feagin’s title has changed to special adviser to the president.