Salary Comparisons Based on Revenue Can Be Misleading

To the Editor:

The basis for reporting organizational income in The Chronicle’s annual compensation survey (“Salaries Rise Modestly at Charities,” September 24) raises serious ethical questions. I am particularly concerned about the double reporting of income in some classifications.

The core issue is the relationship between compensation and scope of responsibility. While it may be true that the American Red Cross, the Arc, Goodwill Industries, and the Y.M.C.A., through organizations located in communities throughout the United States and Canada, have in the aggregate revenue exceeding $1-billion, the scope of responsibility and direct control of the use and application of funds by the C.E.O.’s in your report are far differ ent.

A similar issue arises with the United Way listings. In the case of the United Way, we know that the allocation or fee charged to cover the budget for local United Ways is in the 10-per-cent to 12-per-cent range. I would suggest to you that accuracy demands a direct correlation between compensation and the annual revenue figure over which the C.E.O. has full discretion and control — not the dollar amount raised or earned by, or on behalf of, other 501(c)(3) organizations.

The total revenues for the United Ways listed in your report equal $984-million. Based on the above-cited percentage, at its maximum $118-million is the amount spent on actual United Way activity; $866-million is collected on behalf of other 501(c)(3) organizations. All of the organizations cited above have funds raised on their behalf by the United Way, some to a greater extent than others. (See “United Way’s Figures Don’t Tell Full Story of Employee Campaigns,” Letters to the Editor, September 24.) The facts are that these dollars are reported twice.

One comes to an entirely different understanding of C.E.O. compensation when you consider dollars under the control and direction of the C.E.O. Now you are looking at compensation exceeding $200,000 for individuals managing 501(c)(3)’s with revenue between $5-million and $11-million, not the $50-million to over $1-billion as reported in your article.

Dennis N. McLain
President
Goodwill Industries of Eastern North Carolina
Durham, N.C.