Whether its the Food Bank of Delaware or the American Cancer Society, these nonprofits are still businesses that need to generate different streams of revenue to help their cause. At the end of the day dont John Seffrin and Tim Cook (CEO of Apple) have the same goal? Generate as much revenue as possible in order to cover expenses and utilize what is left to achieve the mission statement of the company. This is the goal of all businesses, not just for-profit corporations.
A study by Charity Navigator showed that only 71 out of the 3,786 nonprofits studied pay their CEOs over $500,000. Thats not even 2%. There is a stigma among the public that the money they donate is going straight to the CEOs compensation package and this is flat out wrong. The study shows that an overwhelming majority of nonprofits pay their CEO a reasonable salary. So what about those 71 companies that do overpay? Well, one can argue that these CEOs are so talented that they can multiply your investment through effective management techniques that will lead to even more donations. Therefore, if paying more leads to better execution than donors should be okay with higher executive compensation. .
The same study by Charity Navigator showed that nonprofits with higher expenses tend to pay their CEOs larger salaries. Nonprofits with over $200 million in expenses paid their CEO an average of $526,679 while those with $1-3.5 million in expenses paid $97,158. This is an extreme drop off in pay. It is essential for the public to understand that only the very large nonprofits pay their CEOs a salary over $500,000 and even that may be justifiable. If someone can manage over $200 million in expenses while still generating enough money for the public good, then they wholeheartedly deserve the salary they receive. These CEOs are obviously bright, able, and committed leaders that are working for the public good so they must be rewarded for their dedication.