Getting a Grip on Excess

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NGOs are in the news with jet-setting executives being grounded and dire warnings that reputations are in jeopardy because charities can’t control their boardroom and C-suite extravagances.

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Excesses? Tell me that paying a single person US$534 million a year is not excess. More like obscene. This ignoble distinction goes to Leon Black, chair of private equity group Apollo.

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The for-profit sector’s average CEO pay is US$13.9 million. (But hey, Larry Page at Google only makes a measly US$1 million.) Last year the median salary for a charity CEO was US$126,000. Clearly something’s awry here.

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A country director I know here who works for a highly-reputable education and livelihoods INGO manages a budget of about US$10 million and around 100 staff. Those aren’t bake sale figures. What do you think he’s paid? What do you think he ought to be paid? What I don’t understand is those who insist that if you work in the nonprofit or charity or development sector you have to dress in rags and better, self-flagellate regularly.

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And there’s the ugly truth: in the for-profit world, the more value you bring to the table (or create), the more money you make. In the nonprofit world you are deemed monstrous, bordering on immoral, to expect even distantly similar treatment. In the nonprofit world you cannot make money helping people.

 

I’ve written about this regarding nonprofit overheads; now it’s time to address paycheques. Current thinking goes something like this: Any money coming into a charity must go straight to delivering vital frontline services rather than lining the pockets of unaccountable charity executives. OK, but here’s the problem. It’s called scale. You can certainly boast that 100% of your bake sale earnings went to frontline services as you hand over US$8 to your favourite charity. But what if you had some staff (like a talented CEO), who knew how to leverage your bake sale into a national fundraiser that netted US$8 million?

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Given the dwindling government participation in the social sector, many charities have become complex entities, running multiple programs at home and globally. They employ hundreds if not thousands of people. Nonprofits need to attract talent just as much as Goldman Sachs. It’s already understood that public money going into a charity requires accountability and transparency, but that misses the point. Like the nonprofit world, why do we continue to pay crap wages to our teachers and social workers, and astronomical salaries to barely out-of-their-teens footballers?

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I say nonprofit pay is a matter between executives and their boards and trustees, justifiable to their donors.

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How do we reward the folks tasked with the overwhelming goal of making the world a better place for all? We wish to eradicate malaria and poverty and ensure a toilet for everyone, while enforcing an economic apartheid on the salaries to do so.

 

I don’t think the answer is a bloated pay package, but hey, for the nonprofit leader who is trying to figure out, and succeeds in, preventing the needless deaths of tens of thousands of women and children every day? It’s time to pay them what they’re worth.

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Photo: Didier Weemaels / unsplash.com

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This article originally appeared in Word Vietnam magazine and has been adapted.