Even non-profit executive pay can get out of hand

In Wednesday’s Chicago Tribune (January 13, 2010), a front-page article revealed that the CEO of a non-profit organization that manages low-income housing also managed to earn herself a 2008 salary of $685,000. (Here’s the link to the article.)

How that happened is instructive. First, the CEO was also a member of the three-person Board that determined her salary. Second, the other two members of the Board had business interests tied to the non-profit’s operations. Third, the P.R. spin – including with the IRS – was aggressive, including the claim that because the non-profit didn’t engage in fund-raising (receiving mainly federal grants), the Board pegged the CEO’s compensation to that of “peers” at for-profit organizations. On further scrutiny, that argument falls on its face, because 1) not having fund-raising responsibilities actually makes a non-profit CEO’s job easier; and 2) for-profit organizations with annual revenues of $7 million do NOT pay their CEO’s 10% of revenue.

There are so many pockets of opportunity out there for less-than-virtuous people to advantage themselves and line their pockets with private and public monies. The reporters at the Trib did a nice job bird-dogging this one, and even if the IRS previously found “no improprieties” in the level of this CEO’s compensation (and her three homes, funded in part by a $500,000 loan from the non-profit itself), we should demand some more honest explanations – and some honest actions, too.

We shouldn’t rush to judgment, of course, but if it walks like a duck …