Monday, September 28, 2009

Hold That Crime Wave!

This morning's issue of the Chronicle of Philanthropy reports that "Nearly 30% of Nonprofit Leaders Took a Pay Cut This Year; Pay in 2008 Grew Quickly." NPR's Morning Edition picked up the story and played it this way: "It's one of those things that irks charitable givers no end - the high salaries paid to some nonprofit CEOs." The reportage went on to say that "the top pay at the nation's largest nonprofits rose again last year. ... But the survey also found signs that these high dollar salaries may be starting to turn around."

Ken Berger who heads rating agency Charity Navigator said that many donors go to the site, find out what a CEO's salary is "and vow never to support them again." He says this is the number one comment he gets.

Clearly there are horrendous salary abuses that make hot stories hotter and then there's the Chronicle's ridiculous and unsupported assertion that "The increases that nonprofit leaders received in 2008 are especially noteworthy considering the sharp drop in pay earned by for-profit executives." Huh? Why noteworthy? Among the 325 large charities surveyed nearly 100 leaders took a cut; half got raises; half pocketed smaller increases or saw their salaries drop.

In any organization setting the CEO's salary is a work of art. For me the test should be less about the CEO's salary (and perks) standing alone and more about his/her compensation in relation to the organization's total budget and the total responsibility assigned. Looked at that way I can make a pretty good case that even the highest paid CEOs in the kingdom of nonprofits are grossly underpaid! Take NYU - one of the institution's named. President John Sexton earned $1.3 million in 2008. Leaving aside the brilliance and verve he has brought to the job (non-quantifiable of course) the university's 2008 revenue budget was over $2 billion and it had assets on the balance sheet of nearly $6 billion. Even if you add in the perks like housing, car(s), entertainment allowance(s) etc. and goose his pay up to say $1.8-2.0 million I don't think he's near to being overpaid.

If you look at who's on his board of trustees there aren't many who don't have even sunnier paydays than Sexton for jobs of comparable scope and responsibility - plus the stock options (in some cases) that are of course not available in nonprofits. I'm sure Sexton will appreciate my plumping for a pay increase. But that's not my point. My sniff test is reasonableness. He passes.

At MOMA and at the Metropolitan Opera the Chronicle reports that directors Glenn D. Lowry and Peter Gelb respectively took pay cuts from their $2.1 million and $1 million+ salaries. Each man has brought innovation and excitement to his job - assets that don't show on the balance sheet of either institution. MOMA's assets exceed $1.6 billion and their revenues are about $150 million. The Met's assets (a few years ago - the latest available) were about half a billion and revenues about $140 million. These are huge numbers for arts organizations and few around the country come anywhere close. But I think given the responsibilities involved these guys are not overpaid. I believe their compensation is reasonable.

If you climb down the charity ladder you could apply the same is-it-reasonable test to any organization. I think you'd find most would pass, a few egregious abuses would be found, but for the most part, the men and women who run these organizations are - in my experience - less well compensated than their counterparts in the other world.

Years ago I was a stringer for the two dailies in Paterson NJ. Because I had a day job I spent more time at the morning paper because it went to bed late the evening before. One slow news night I was hanging about hoping to be asked to do something, anything. An older reporter told me to go over to police HQ and copy out the evening's entries from the booking blotter. There was a story the next day - under his byline - "Crime Wave Hits Paterson." Wow.

Friday, September 18, 2009

A Mighty Wheeze From Little ACORN Grows!

ACORN - (Association of Community Organizations for Reform Now) is the nation's largest community organization of low-and moderate-income families, working together for social justice and stronger communities. In other words they serve the poor through their advocacy and have been at it since 1970. Fuhgeddaboutit.

Some acorns fall further away from the tree than others. At ACORN as the NY Times recapped this morning "... some workers were videotaped offering advice to conservative activists who were posing as people interested in establishing a prostitution business," and allegedly those workers told them how to do it and how to evade taxes.

"Conservative activists" have long abhorred ACORN. They tried to make it an issue in the Obama campaign (nudge-nudge, Obama was a community organizer). Health care legislation, wars in Iraq and Afghanistan, nuk-el-er proliferation in Iran, financial legerdemain, pervasive conflicts of interest, ethical lapses, seedy sex and other hypocritical conduct is not keeping the Republicans (and alas some Democrats) - in both houses of Congress - busy enough. Industrious as they are ACORN is the dog days diversion. The House has voted to prohibit any federal funding of ACORN programs; the Senate is not far behind. This appears a largely symbolic act given that most of its revenues come from members' donations and other non-governmental sources.

The real issue here is not ACORN but the "war on poverty;" not that war, not Lyndon Johnson's famous coinage but the right's war on the poor. For as long as I can remember the image of the peasants storming the castles and seizing all that is ours has inflamed the imagination of the perfervid right. Ronald Reagan of blessed memory brought us the "Welfare Queen" tooling around in her Caddie as he and his cohort systematically disemboweled the Legal Services Corporation (largely succeeding in truncating its ability to defend poor people in civil litigation). The current hullabaloo over immigration is a first cousin to the war on the poor - viz Lou Dobbs a privileged big-mouth whose rantings goose ratings.

As a long time board member of PICO National Network ( a similar but smaller organization doing like work in 50 communities nationwide I have learned that despite their huge numbers (currently 13.2% of the nation's population according to the guv-mint) individual by individual the poor are invisible. But when they act collectively (a word inciting hydrophobia among the likes of Fox News, much of CNN, Hannity, Beck, Dobbs Savage et. al.) on matters like housing, safety, immigration, education, health care and anything else you can think of in which the haves crap on the have-nots they get results. In PICO's "actions," (similar to ACORN'S methods - except we take no government money) carefully organized presentations to legislators locally, statewide and nationally as well, produce results - especially at local levels.

The right wing hullabaloo and stacked "town meetings" railing against Obama's health care initiatives "you lie" (boy) - The Times Maureen Dowd really nailed it! - has at its institutional core racism, pure and simple.The organized war against health care reform and the war on the poor is the same war. Its battlefields are America's inner cities and essentially the people of color who live in them. Though there are millions of people of color in the rural US - African Americans, Hispanics and Native Americans - there are actually more poor whites. The whites out in the sticks and the hundreds of thousands of Native American poor on reservations - not benefiting from casinos and cigarettes - are even more invisible than the urban poor.

Congress's latest blather and diversion from the nation's business is not about ACORN. Think of cave dwellers blinded by the light.

Wednesday, September 9, 2009

Back to School

With the last quarter of the year on the near horizon it seems America's nonprofits are and have been struggling with endowments sliced nearly in half, deep cuts in government funds and giving in general off anywhere from 10-30%. Admittedly these data are impressionistic, reliant on trade gossip, press reports, direct experience and a tremulous gut. Some groups I know will come out technically ahead this year because they budgeted conservatively in January - reducing projections substantially from previous highs. Others with cock-eyed fiscal years, poor forecasting or both are showing significant losses in two calendar years running.

Though I can't prove it I truly believe it will get at least a bit worse before it gets better. In past recessions what I saw was philanthropy as a lagging indicator - meaning it plopped after the rest of the economy and a leading indicator in the recovery - coming out of the swoon sooner. If I'm right for 2010 charities will have to be even more diligent in setting expectations and in assuring fiscal prudence. If I'm wrong they will not be hurt by being careful.

A few thoughts:
  • During the troubles we have heard people urge like nonprofits to merge to save money. Horse pucky. Nonprofits have trouble merging in the best of times when both parties bring strong balance sheets and profit and loss statements to the table. In these times one party is likely to be much weaker than the other and the acquiring organization may be taking on trouble. Ergo: if you're hurting look at a possible merger. But more realistically get your boards to concentrate on rebuilding the balance sheet and improving the P. and L. from the inside out. The frog won't turn into a prince. Better to plan for the princess turning into a frog.
  • When you buy a new car you get a better deal by bargaining up from the dealer's true cost rather than haggling down from his posted list price. That's how I think you should be looking at your organization. Assume the government money is not coming back any time soon. Individual and family foundation donors - contrary to Madoff and other exaggerations - have been less hurt by the recession than foundations and corporations. But many have been hurt. Plan for a modest comeback for individual giving in 2010.
  • Grant-making foundations are asset driven. The so-called market recovery has not yet come close to attaining previous highs. That means foundation assets haven't either. Multi-year grants are unlikely and if you're not already on their books the odds lengthen.
  • With corporations it will continue to be pick and play. Big banks, investment houses, oil and many entertainment companies are doing well. Retail and big box are mixed; communications, food, real estate are mostly sucking wind.
  • Until employment rebounds the economy will not fully recover. No one I read is forecasting a quick recovery.
In a word caution for 2010. Stick to the basics. Don't forget your galoshes.