Kevin Frost (Middle) and Bill Gates. Credit: Zimbio.com
There is quite an online squabble over the disclosure of salaries paid to CEO’s by a number of nonprofit organizations. Among these chief executives in question is The Foundation for AIDS Research, amfAR’s Kevin Frost, who, in 2012 received a staggering salary of $361,481, according to Charity Navigator.
Despite the outstanding six-figure salary received by Frost, Charity Navigator, which claims to be America’s leading evaluator of charities, still rated amfAR with 4 out of 4 stars, giving it 89.98 financial rating and 100 out of 100 score on accountability and transparency in that same year.
Anchored in its motto, “making AIDS history,” amfAR is geared towards securing funding for research in pursuit of ending the said disease. Also, it aims to expand access to treatment by people inflicted with AIDS.
Majority of the masses who participated in charitable works and handed out a parcel of their hard-earned money to institutions like amfAR were infuriated by these numbers. A general cloud of questioning began, with people asking why CEO’s receive that much, given that they work for nonprofit organizations.
In an attempt to shed light on these concerns, we attempted to reach out to amfAR CEO Kevin Frost. However, when asked to comment on the matter, Frost opted to stay mum by not returning any of our emails.
On the other side of the spectrum, the argument was that CEO’s, like Kevin Frost himself, are individuals with careers as well, and that they do not work for free. Moreover, it was said that $300,000 to around $400,000 would not even equal the salary they could be paid by private organizations, should they wish to join these companies’ staff instead.
This ‘justification’ was a response to the pervading belief among some, that employees of a nonprofit organization receive minimal pay, or no salary at all, for their service.
However, this argument could not get any more unsound. These contentions are invalid. For one, comparing nonprofit organizations to private companies is flawed in itself, because first and foremost, as the name suggests, the former ought not to be profit-oriented unlike its private counterparts.
In addition, accepting this argument would mean acknowledging the need to offer loads of money to potential team members of a charitable institution as sole way to get exceptional talents to join the team.
This could mean that nonprofit institutions have the potential to become dismissive altogether of other more important considerations like whether or not these individuals align to charity values, and whether or not they epitomize what the institution stands for.
But what is it really, a calling or just another profession?
I’d like to believe that the decision to join an institution like amfAR springs from a calling more than the desire for above par pay and all other perks that go with it. After all, the goal to better the lives of people in need ought to be the core of institutions like amfAR. It aims to give, more than receive. Shouldn’t its key people share the same perspective?
On the other hand, it has been reiterated how these figures are only apt so nonprofit institutions could compete against private companies in staff acquisition. But shouldn’t the fact that they would be working for an important cause be the chief motivation for these “qualified” people to choose being part of a nonprofit organization? Is it not enough reason for them to want to dedicate their skills and potentials for its success?
Sure, working for a private company comes with great pay. However, they would not even come close to giving their staff the same fulfillment working for an organization devoted to meeting the needs of an even greater world than that focused on oneself alone, affords.
How much is just enough and how much is too much?
According to 2014 NPT Salary and Benefits Report, the average salary of a nonprofit CEO/president last year was $118,678, exhibiting a huge discrepancy when compared to the 2011 survey that disclosed CEO’s receive an average of $50,000 to $75,000 per year.
But as it came to everyone’s knowledge, Kevin Frost, together with an overwhelming number of other CEO’s receive even more than this already astounding income, with some receiving compensation of over a million dollars.
As answer to this disquieting concern, there have been legislation initiatives from New York, New Jersey, Florida and Massachusetts with regards to capping salaries of nonprofit organizations’ CEO’s. This proposed bills intend to limit the pay of CEO’s in Florida to $129,972; in Massachusetts to $500,000; and in New York to around $200,000.
While these bills haven’t received state approval yet, these efforts only mirror one thing: people are starting to recognize the fault in the salary compensation scheme of these executives.
Not surprisingly, donors who devote their time and resources in supporting charities which they believe advance their chosen advocacy, are beyond upset. This is another pressing issue, besides the problem arising from overpaying nonprofit organizations’ CEO’s. Losing the public’s support could shake these organizations to their core, especially those who rely heavily on public funding.
We could not risk the public losing their faith in the charities they choose to identify with. But securing their continued support would require nonprofit organizations to solve the issue that abounds from the over-the-top salaries of its executives.
This is a predicament that could not be overlooked any further, if they aim to maintain the accountability and credibility of their institutions.
After all, what sane donor would want to donate to a charity which seemingly prioritizes the paycheck of its CEO over its duty to ensure that the public fund reaches the people it is designed to help?