Report Analyzes Pay Trends of Charity CEOs

Thanks to persistently bigger raises over the past several years, chief executives at the largest nonprofit organizations now earn almost 10 times as much as leaders of small charities, a new study has found.

Leaders of charities with budgets of $50-million or more earned a median salary of $387,721 in 2007, meaning that half made more and half made less. Top executives at charities with budgets of $250,000 or less earned a median of $40,000, according to the survey by GuideStar, an organization in Williamsburg, Va., that collects the informational tax forms that nonprofit groups are required to file with the Internal Revenue Service.

Salary increases for top executives at the largest charities (with budgets of $50-million or more) have now trounced increases earned by executives in the eight other size categories tracked by GuideStar for at least the past four years.

In 2007 leaders of the biggest charities received a median pay increase of 6.3 percent, far higher than the increases received by smaller charities. For example, chief executives at charities with budgets between $500,000 and $1-million received a median increase of just 3.6 percent.

Chuck McLean, GuideStar’s vice president of research and the survey’s author, says he expects the trend to come to an end within the next few years, when salary cuts being taken this year by executives at the biggest charities begin to filter into the data.

“I suspect that when we can finally see what really happened between 2008 and 2009, we’ll find that the increases for leaders of the large charities were much more in line with what was going on in the rest of the sector,” he says.

Gender Gap Persists

The report also showed that female executives continue to earn far less than male executives. At the largest organizations, that gap widened in 2007.

Men who headed charities with annual budgets greater than $50-million earned $413,910 in 2007, 24.6 percent more than the $332,314 earned by women heading organizations in that category. In 2007 men who led one of the biggest charities received a pay increase of 6.3 percent, while the increase for women was just 5.1 percent.

In all other categories, however, salary increases for women matched or exceeded those earned by men. At the smallest charities (with budgets below $250,000), women received a pay increase of 2.9 percent, compared with an increase of just 2.1 percent for men.

Over all, women held 47 percent of the chief-executive positions but received only 35 percent of the total compensation. Part of the reason for the gap is that women tend to head smaller organizations. Women held 56 percent of the top positions at organizations with budgets of $1-million or less but only 36 percent at groups with budgets of $1-million or more.

While the gaps between male and female compensation remain wide, they have narrowed significantly since GuideStar released its first compensation report, in 2001. That survey, based on 1999 data, found that men who led the biggest charities earned 47 percent more than women who led charities of a similar size.

Other Findings

The report also analyzes compensation by type of charity and by location. Among the findings:

• Leaders of charities that focus on health, science, and medical research had the highest salaries, with median executive compensation of more than $103,000 in all three categories. The worst-paid executives led charities that focus on religion, food, and sports; the median salary for all three categories was $65,000 or less.
• For the fourth straight year, chief executives in Washington earned the highest compensation, a median of $112,044. Top executives in Houston earned the least, $78,320. But when adjusted for the cost of living, executives in Dallas, Detroit, Houston, and St. Louis had among the highest compensation.

The 2009 GuideStar Nonprofit Compensation Report is based on an analysis of federal tax returns filed by nearly 100,000 nonprofit groups. Electronic copies of the report can be downloaded at a cost of $$349, while CD-ROM versions cost $449. They are available from the GuideStar Web site or by calling the organization at (866) 989-4511. Go to: http://www.guidestar.org.