September 18, 2011 | Read Time: 3 minutes
Most executives at the nation’s largest charities and foundations do not earn nearly as much money as their counterparts at large for-profit companies, but neither do they face the wild swings in compensation that are common in the business world.
In 2009 chief executives at 268 of the nation’s biggest charities and foundations received a median pay increase of 0.7 percent, according to The Chronicle’s annual survey of executive compensation and benefits. That means half got a bigger increase and half got less or no increase at all.
As the economy has improved, chief executives are doing better. For the 128 organizations in the survey that provided data for 2010, the median increase in compensation from 2009 to 2010 was 2 percent.
The median 2010 compensation (primarily salary and bonus) for top executives at the organizations in the survey was $387,000.
The median total pay package, which also includes items like retirement and health benefits, was $433,000.
Corporate CEO’s saw pay decline 8 percent in both 2008 and 2009, but their compensation bounced back strongly during 2010, when the economy appeared to be rebounding. A survey by Equilar, a Redwood City, Calif., company that studies executive pay in the for-profit world, found that the total compensation paid to executives of companies in the Standard & Poor’s 500 rose 28 percent, to a median of $9-million, in 2010.
Steady Bonuses
Incentive pay—a big factor in the ups and downs of for-profit executive compensation—is not as volatile at nonprofits.
The portion of total pay for charity and foundation leaders that came through bonuses held steady at a median of roughly 11 percent in 2008, 2009, and 2010, according to an analysis by The Chronicle.
The steadiness of bonuses as a percentage of pay is noteworthy given that some executives failed to meet the standards required to earn a bonus and others voluntarily declined bonuses.
James Rocco, a compensation consultant in New York, says roughly half the nonprofit groups he advises provide incentive pay for top executives, up from about 10 percent in 1990. Incentive plans can theoretically save charities money during hard economic times, since the executives are less likely to hit the fund-raising and other financial goals that leaders typically must meet to receive bonuses.
“I expect the trend to continue,” Mr. Rocco says. “It makes good business sense to do this.”
Highest-Paid CEO’s
Some charity executives make far more from bonuses and retirement benefits than they earn in salary.
Steven M. Altschuler, chief executive of Children’s Hospital of Philadelphia, earned a salary of $948,293 in 2009 and an identical amount as a bonus. He also received more than $2-million in benefits, primarily deferred compensation that accrued over five years.
Children’s Hospital cited Dr. Altschuler’s “exceptional” performance in a statement explaining his 100-percent bonus and $4,025,039 total-pay package.
The hospital network has tripled in size since Dr. Altschuler took over a decade ago, the charity says.
Dr. Altschuler was the highest-paid chief executive in 2009, according to The Chronicle’s survey, and one of two hospital leaders in the top five. James J. Mongan, chief executive officer at Partners HealthCare System in Boston, took the second spot, with $1,945,829 in total compensation.
Mr. Mongan was followed on the list by Robert Beall, president of the Cystic Fibrosis Foundation, who earned $2,082,276. Fourth was Reynold Levy, president of the Lincoln Center for the Performing Arts, in New York, who received $1,970,460. Rounding out the top five was Vanderbilt University Chancellor Nicholas Zeppos, who earned $1,890,274.
As one might expect, the raises given to leaders of nonprofits are greatly affected by the financial health of the organizations.
In 2009, when income at the groups in the survey dropped more than 1 percent, their chief executives received a median increase in compensation of less than 1 percent, the smallest in many years.
In 2010, when income increased 6 percent, the charity and foundation leaders were rewarded, too—with a median increase in compensation of 2 percent.
Peter Bolton, Caitlin Harrison, and Marisa López-Rivera contributed to this article.
