March 20, 2009 | Read Time: 1 minute
As public anger grows over the payment of bonuses at companies that received federal-bailout money, Alice Korngold wonders how nonprofit executives should be compensated.
On her Fast Company blog, Ms. Korngold, a nonprofit consultant in New York, writes that charities should provide “fair and reasonable compensation” to attract and retain good executives. But bonuses should not be part of it.
She argues that bonuses are a bad idea because nonprofit leaders are driven by the missions of their organizations, not financial incentives, and because determining what performance goals a board would set to determine if someone should receive extra pay is tricky.
For example, if a chief executive receives a bonus because he or she ran a successful fund-raising campaign, it would undermine the charity, writes Ms. Korngold.
“Fund-raising and revenue development to achieve financial success is a team effort, involving staff and board members. So if the CEO is rewarded for dollars raised, how will foundations and philanthropic donors or staff react when the CEO is essentially getting a piece of the action?” she asks.
In recent years, large nonprofit groups are offering more bonuses to their executives, according to a 2007 Chronicle article. (A paid subscription or free temporary pass is required to view the article.)
What do you think? Should nonprofit groups use bonuses as financial incentives? Click on the comment button below to share your views.
