Fundraising ‘Arms Race’ Triggers Big Pay Deals

Editor’s note: This article has been corrected to reflect inaccurate reporting about the salary of Karen Kress, of Yellowstone Park Foundation.

Seeking donations for charity has become a lucrative job for many of the nation’s top-tier fundraisers, with dozens taking home more than $500,000—and at least two topping the $1-million mark.

Big bonuses more than doubled the earnings of some top fundraisers, according to a Chronicle study of pay in 2011, the most recent year data were available.

Anne McSweeney, campaign director at the Memorial Sloan Kettering Cancer Center, was paid more than $1.2-million in 2011, while Susan Feagin, who was then in the top fundraising job at Columbia University, earned more than $1-million.

Compensation is rising fast in large part because very few fundraisers are capable of raising huge sums and few possess the skills needed to push board members to ask business colleagues and others for big gifts, says Marshall Field V, a World Wildlife Foundation trustee and member of the Chicago family that founded the department store chain of the same name.

“Some of them can keep up, but a lot of them can’t,” he says. “For the top 1 percent of these people, it’s going to cost you a lot of money.”

(See our database of fundraiser compensation.)

‘Arms Race’

The Chronicle reviewed salary data reported to the Internal Revenue Service by about 280 nonprofits that each raised more than $35-million in 2011. Such details are available on the informational tax forms charities are required to file.

The 20 people who earned the most received more than $550,000 apiece in total compensation in 2011.

The study found that fundraisers in the highest echelon at medical institutions and universities, which are running ambitious efforts to expand private donations, earned more than their counterparts at arts, environmental, and other nonprofits.

The result is what Steven Rum, vice president for development at Johns Hopkins Medicine, calls an “arms race” among nonprofits to lure talented fundraisers with hefty salaries.

That arms race isn’t limited to a handful of people at the largest nonprofits, Mr. Rum and others say.

“I lost five people to an institution a mile away, all predicated on one thing: money,” says Mr. Rum, who was paid $505,491 in 2011. Whenever he loses a top deputy, he says, “I have to repost the position and invariably I’m having to pay more than the last person in the position earned.”

Challenging Jobs

Fundraisers and others say the high pay levels are not just about a scarcity of top candidates but also about the changing nature of senior development jobs.

“This is now a discipline involving complicated metrics, sophisticated IT systems, engagement strategies, and there is a lot to this,” says Michael Eicher, now senior vice president for advancement at Ohio State University, after leaving his position at Johns Hopkins University, where he earned nearly $830,000 in 2011.

“Boards and academic leaders,” he adds, “have come to appreciate experienced fundraisers who can deal with a politically charged environment with lots of moving pieces. If you add the leadership and management piece, these are hard jobs.”

The pressure on chief development officers “is enormous,” says Lois Lindauer, a Boston recruiter who specializes in filling senior fundraising positions.

She says salaries began to rise because nonprofits needed to replace money that became more scarce in the tough economy. “Not only was there a recession, there was a reduction in federal, state, and foundation funding,” she says. “A combination of all these ingredients is causing intense pressure on the chief development officer.”

Wide Range of Pay

The figures found in The Chronicle study suggest that compensation at the top of the pay scale for fundraisers is significantly higher than salary data reported elsewhere.

For instance, GuideStar reported that compensation in the 90th percentile of fundraisers in 2011 was $350,845 for men and $324,826 for women.

Learning about the size of salaries at big institutions has surprised, and in some cases angered, fundraisers at smaller nonprofits.

“Most fundraisers do not have huge incentives like this,” says Robyn Moore, vice president for development at the Alzheimer’s Association of Colorado, who made $106,559 in 2011.

“My gut reaction is that donors’ money is not going to the mission, it is going to the fundraiser instead.”

Geography, peer comparisons, and fundraising results must be considered when evaluating what’s appropriate to pay a fundraiser, says Ken Berger, president of Charity Navigator, a nonprofit watchdog group. But even after considering those factors, the pay scale has gotten out of whack, he says, particularly at hospitals and colleges.

“You don’t need to take poverty wages,” he says. “But if you’re working for a public charity, the idea of fundraisers becoming millionaires is problematic. I don’t care how much money you raise.”

Retention Struggles

As pay levels rise ever higher, many top fundraisers find it difficult to keep their best performers, says Scott Nichols, senior vice president for development at Boston University since 2006. “You have to desperately work on retention and recruitment every single day,” he says. “You are so vulnerable to getting raided.”

He adds, “For about an hour and a half of the recession, I thought ‘Oh good, salaries won’t keep going up.’ It didn’t last long. Now we are back into lots of expansion.” Several universities, he notes, are gearing up for multibillion-dollar campaigns, and “they are going to raid others.”

Many highly paid fundraisers are nonprofit veterans who did not necessarily set out expecting big salaries.

Armando Chardiet, who received $677,906 in 2011, is now earning considerably more as the top fundraiser at the Cleveland Clinic than when he started his nonprofit career as a low-paid grant-proposal writer in the 1970s.

Today more than 100 people report to Mr. Chardiet, ranging from recent college graduates who make $30,000 a year to help with fundraising to lawyers who make $200,000 crafting complex giving plans for big donors.

When he joined the Cleveland institution in 2010, Mr. Chardiet helped the hospital reach its $1.4-billion campaign goal. Since then, he has landed big gifts, including a $30-million contribution from fashion-industry veteran Pauline Braathen, and he oversees a fundraising operation that, he says, raised $173-million last year.

Kathleen Kane, who earned nearly $845,000 in 2011 as the lead fundraiser at the City of Hope medical-research center, says her pay level reflects both her experience and her responsibilities.

Ms. Kane says she is bothered by the perception that fundraisers are simply rainmakers who use their social skills to raise cash.

“People think all we’re doing is going out and having lunch and talking to people,” she says. “I wish that were the case. It’s a 24/7 job.”

Ms. Kane, who has been at City of Hope for a decade and worked in fundraising for more than 30 years, manages a staff of 220 people that includes fundraisers, a communications team, and government-relations experts.

In 2011, when City of Hope raised $82-million, part of her pay included a $257,080 bonus.

Ms. Kane’s salary and bonus are set by the center’s board, which depends heavily on a compensation survey developed by Mercer.

Ms. Kane declined to say exactly how her pay is calculated, but she says the factors include how well she manages expenses and the number of potential new donors that she and other staff members identify.

Incentives to Move

Another reason for escalating pay is that many fundraisers demand an incentive to relocate, recruiters say. It’s not uncommon for a fundraiser to seek 30 percent more than the salary earned in the last job, recruiters say, especially if the person has a spouse or partner who will need to find a new position.

Karen Kress, who earned $172.070, as head of the Yellowstone Park Foundation, the Montana fundraising arm of the government preserve, says she usually has to offer at least a 20-percent bump in pay for her own new hires to entice them to move to the foundation’s relatively remote office. [Editor’s note: The previous paragraph has been revised to omit inaccurate information about Ms. Kress’s own pay when she moved to Montana from a job at the National Wildlife Federation. She did not receive a 57-percent increase; in fact, she earned more at the federation.]

The pay levels at big nonprofits have a trickle-down effect to local organizations.

Marilu Boucher, who earned $108,343 in 2011, says she doesn’t resent other fundraisers’ $1-million paychecks.

As head of development at the Food Bank of Contra Contra and Solano Counties, Ms. Boucher helped raise $47-million in 2011. Nearly $40-million of that consisted of food contributions.

She and her staff of five fundraisers work “in the trenches” she says, trying to attract small donations. She adds that a large gift for the food bank is $2,500.

It’s a different job than, for example, the one done by Ms. Kane of City of Hope, whose record gift was $100-million. Those high earners, Ms. Boucher says, “travel in different circles.”

Still, she feels pressure to increase contributions to the food bank. In 2013, after more than a year of cajoling, educating, and pushing, the food bank’s board approved a new position dedicated to securing big gifts.

Originally, she says, the board wanted to pay the new fundraiser $66,000. Ms. Boucher told trustees they’d never find someone at that rate. Eventually, they agreed to $80,000.

Tracy Salisbury, a Bay Area lawyer, says she and her fellow board members wanted to be convinced that spending so much money on a fundraiser was a good use of resources.

“When people invest in a charity, they want to make sure their money goes to good works, not overhead,” she says.

But given the high demand for successful fundraisers, it’s likely that pay will keep increasing at larger nonprofits.

Not only is there a scarcity of top-notch people ready to step into the job, says Leyna Bernstein, a California nonprofit recruiter, but those job seekers have another advantage.

“Folks used to asking for large gifts,” she says, “know how to negotiate.”

Sarah Frostenson, Joshua Hatch, Justin Myers, and Ryiesha Simms contributed to this article.