How The Chronicle Compiled Its Survey of Nonprofit Executive Compensation

October 1, 2009 | Read Time: 3 minutes

The Chronicle‘s 17th annual salary survey provides compensation information for top officials at 325 charities and foundations in the United States.

Many organizations included in the report were among the charities on last year’s Philanthropy 400, The Chronicle‘s annual list of charities that raise the most money in private donations, or are among the nation’s wealthiest foundations.

Because colleges, hospitals, and other institutions are heavily represented on the list of 400, The Chronicle supplemented its survey pool with groups in categories that fell short of a representative sample — for example, in the arts and social services.

The survey sought information from 50 private foundations, 15 community foundations, and 10 operating foundations, the wealthiest in each category.

Seven watchdog organizations and 18 trade groups and philanthropy-research organizations are also represented in this project.

The Chronicle survey examines pay at the wealthiest charities and foundations, and while it probably includes most of the highest-paid nonprofit leaders in the country, there may be other top earners employed by small charities or foundations or by organizations that rely more heavily on government support.

Gathering Data

The Chronicle asked each organization to answer a questionnaire and provide its most recent Form 990, the informational tax return the Internal Revenue Service requires charities to file annually, or its Form 990-PF, the equivalent return for grant makers. Chronicle researchers also collected audited financial statements and annual reports for the 2008 fiscal year, or the most recent year for which data were available.

Both of the IRS forms include broad information about compensation, benefits, and expenses provided to an organization’s officers and highly paid employees. The Chronicle‘s questionnaire asked for more detail, such as the amount awarded in bonuses, housing allowances, health insurance, retirement, and other payments.

The IRS redesigned the Form 990 and required organizations to file the new version for fiscal years that began on or after January 1, 2008. Because some nonprofit groups have not yet been required to use the new form, the survey, which was redesigned to accommodate these changes, includes information that was compiled from data contained on both the new form and the old Form 990.

One element of nonprofit compensation that received much scrutiny in the redesign was deferred compensation. Charities are still required to report the sums provided to employees in an amount accrued over several years, so it is in the reader’s interest to interpret such information with care. Other one-time circumstances, such as a performance bonus, or moving expenses, may make data from year to year hard to compare.

The Chronicle‘s survey gathered information on an organization’s top official, such as the chief executive, president, or executive director, and the highest-paid employee other than the top executive. Employees whose compensation was inflated due to a one-time payment, such as severance or a pension payout, were excluded from the mix.

Estimating Salaries

Ninety groups had the IRS’s permission to file their most recent tax returns late, and 35 of those organizations provided the most current pay data. Most of those figures were from 2008, and the groups cautioned that they were estimates. Seventy-two other groups said the most current information they could provide was for 2007.

Thirteen religious organizations provided financial data, though such groups are not required by law to publicly disclose that information.

While The Chronicle sought data from 50 private foundations, only 49 salaries are included in its final online data set. That is because the Walton Family Foundation, in Bentonville, Ark., does not list any paid staff members on its most-recent IRS return. The foundation declined to answer any questions about whether it pays staff members.

The Chronicle‘s survey asked for an annualized compensation figure for executives who started their jobs after the start of the 2008 fiscal year, and all but seven of the 17 groups whose chief executives worked partial years provided that data.