By Drew Lindsay, Chronicle of Philanthropy, 9/13/2016
Economists are worrying about the next recession, but nonprofit CEO salaries may still be getting over the last one — except, that is, in America’s major cities.
GuideStar’s annual compensation survey, released today, shows the median pay for top nonprofit executives increased by 2.6 percent in 2014.
Before the Great Recession, that figure consistently topped 4 percent and even reached 7 percent at large organizations, according to Chuck McLean, GuideStar’s vice president for research.
The new survey, however, notes that 2014 was the sixth straight year that the median increase fell short of 4 percent. "It really seems to have been stuck at that lower level," said Mr. McLean.
Among the possible culprits for the slowdown: public scrutiny of executive pay, which is making boards gun-shy about raises. "There have been a number of states that have said that, ‘Oh, these compensation levels are too high. If you have a state contract, there’s a limit to how much you can pay the CEO,’ " Mr. McLean said.
Research also suggests that nonprofits remained stretched by the recession’s legacy. Last year, more than half of organizations surveyed by the Nonprofit Finance Fund reported they couldn’t meet the demand for their services.
Big Gains in Cities
Pay for nonprofit CEOs in major metropolitan areas defied the national trend. In GuideStar’s survey, the 2014 median pay increase was at least 9 percent in Los Angeles, Detroit, and Oakland, Calif. Another nine large metro areas saw increases of 6 percent or better.
These numbers suggest some cities could be coming out of the recession faster than the nation as a whole, Mr. McLean said. The growth may also result from talent wars in cities where hundreds of nonprofits compete for staff.
Antonia Hernandez, CEO of the Los Angeles-based California Community Foundation, describes a fierce battle to retain staff that is driving up salaries. "My competition for staff is not other community foundations around the country," she said. "When I lose staff, I lose them mostly to private foundations in the area."
Los Angeles saw median CEO compensation at nonprofits climb 9.6 percent in 2014, to $115,658, according to GuideStar’s survey. Ms. Hernandez’s pay jumped 18 percent that year, to $546,790.
Antonia Hernandez, CEO of the California Community Foundation, one of the largest nonprofits in Los Angeles.
She said her board moved to bring her compensation in line with the market; the organization’s most recent study of Los Angeles-area nonprofit pay had found that she was at the "low to middle end" of the salary range.
"With the market analysis, they gave me the boost," she said.
In Detroit, the median CEO salary climbed 9.5 percent to $100,000 in 2014. At the time, nonprofits were beginning to stabilize budgets after the downturn and invest in staff, said Bill Gesaman, strategic-growth officer for the Michigan Nonprofit Association. During 2014, job postings by nonprofits in the city increased 42 percent over 2013, he said.
Organizations that boosted salaries may have been trying to play catch-up for the many lean years, he added. "During the recession, many nonprofits had pay freezes and pay cuts."
The Michigan association’s biennial compensation survey in 2014 showed a 10 percent increase in pay over two years for Detroit-area CEOs.
The GuideStar report is based on data from 2014 federal tax filings by more than 96,000 nonprofits. It covers some 135,000 nonprofit workers, including chief development and finance officers. Other findings from the survey:
Overall, women still lead less than a third of organizations.