How The Chronicle’s Study of Compensation at Big Organizations Was Compiled

The Chronicle’s 15th annual salary survey presents compensation information for top officials

at 298 charities and foundations in the United States.

Many organizations included in this report were among those 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 59 wealthiest foundations.

For categories of groups not well represented on the Philanthropy 400, The Chronicle sought salary information from organizations that raised nearly enough money to appear on that list. Foundations were drawn from several places, including The Chronicle’s annual survey of grant makers and the Columbus Foundation’s survey of community foundations that raised the most money in 2005.

In addition, The Chronicle used information from the Foundation Center to determine the wealthiest operating foundations.

The survey includes 25 private foundations, 19 operating foundations, and 15 community foundations, the wealthiest in each category.

The survey also includes executive compensation information for a dozen watchdog and trade associations that focus on charities and foundations.

The Chronicle asked each nonprofit group to complete a questionnaire and provide supporting information from their most recent Form 990, the informational tax return charities are required to file with the Internal Revenue Service, or Form 990-PF, the equivalent return for grant makers. The newspaper also collected audited financial statements and annual reports for the 2006 fiscal year, or the most recent year available.

The Form 990 and Form 990-PF both include broad information about compensation, benefits, and expenses provided to an organization’s officers and five highest-paid employees. The Chronicle’s survey questionnaire asked for more detail, such as the amount awarded in bonuses, housing allowances, health insurance, retirement, and other payments.

Top Two Officials

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

Eighty groups had the IRS’s permission to file their most recent tax returns late, and 48 of those were able to provide the most current compensation data. Thirty-four groups said the most current information they could provide was for the 2005 fiscal year.

A dozen religious organizations provided financial data, though such groups are not required by law to publicly disclose that information. One religious charity — the Catholic Foreign Mission Society of America (Maryknoll Fathers and Brothers), in Maryknoll, N.Y. — declined to provide information. Campus Crusade for Christ, in Orlando, Fla., provided data on its president’s compensation, but declined to provide information on the pay of other employees, citing a concern that the pay levels were not comparable to those of other organizations in the survey.

Interpreting the Data

The Chronicle survey attempts to give readers a broad look at top compensation at charities and foundations, but it may overlook some of the highest earners. For example, small charities and foundations may pay their top employees more money than do the organizations included in the survey.

In addition, some large organizations are not included on the Philanthropy 400 list because they raise most of their money from government or fees and not from private donations.

Readers should also take care when examining an executive or employee’s compensation and benefits figures because of recent guidance by the IRS on reporting certain types of retirement benefits. Some organizations may not have been reporting accrued retirement benefits of top executives, and as a result, many organizations are now reporting those benefits either as a portion of the total compensation figure or benefits figures disclosed on the informational tax return.

As a result, the compensation of an executive can look significantly higher in 2006 than in 2005.

Other one-time circumstances, such as relocation costs or a bonus based on that year’s performance, may also result in the appearance of a significant change in a person’s compensation or benefits.

Reporting Data

Several organizations provided information in ways that were slightly different than those other groups in the survey used.

• Two organizations provided data solely for one executive: American Institute of Philanthropy, in Chicago, which declined to provide information on the highest-paid employee other than the executive and is not required to do so on the Form 990 because the pay level did not reach $50,000; and the Broad Art Foundation, in Los Angeles, which does not employ a second person full time.
• Compensation figures for two top executives in the survey — Lawrence H. Summers, who resigned from his post at Harvard University last year, and Paul Nurse, president of Rockefeller University — do not include a value for housing they received as part of their employment. Harvard says it does not consider housing a benefit because it requires its leader to live in the university-provided housing.
• One organization, the Salvation Army, in Alexandria, Va., makes a distinction between compensation and allowance pay, and refers to the pay given to all employees as an “allowance.” The goal is to show that salaries are set to accommodate an employee’s basic needs, rather than compensate them for their work. Unlike traditional compensation, the organization’s “allowance” pay does not differentiate between different levels of responsibility among employees.

Some organizations whose 2006 IRS tax forms were not yet complete responded with estimates for the 2006 fiscal year.

The Chronicle’s survey asked groups to provide an annualized compensation figure for executives who started after the beginning of the 2006 fiscal year, and all but one of the 19 organizations who worked partials years provided that information.

The Chronicle’s salary survey was compiled by Noelle Barton, Maria Di Mento, and Sam Kean.