To the Editor:? I was extremely disappointed after reading Paul Chan’s Commentary article on non-profit organizations last week (The Non-Profit Problem). Although we agree on a few points, Chan’s article lacked acknowledgment of essential, but basic, NPO statistics, the lack of which emphasized his ill-informed view on CEO compensation in non-profit organizations. I believe that after digging deeper into the facts on NPO leaders’ compensation, one will find compelling evidence contrasting that stated by Chan. The author and I are in agreement when it comes to the importance of Non-Profit Organizations. NPO charities, in particular, streamline the donation process and allow more people to do good with their money and time. In fact, some NPOs have attracted so many donors that they rake in billions of dollars every year. Chan is correct in pointing out that there is a certain amount of money needed by the directors of these organizations “in order to survive.” But he is quick to question the morals of those in charge. Chan believes, without citing specific evidence, that “some executives of non-profit organizations have questionable morals,” which is probably true in some cases. However, I highly doubt that leaders of NPOs work in the non-profit sector in order to “beat the system.” Luckily, Chan is not alone in his desire for transparency in non-profits. Charitynavigator.org is a nationally recognized website specializing in reporting the efficacy of thousands of America’s charities. According to a study released by Charity Navigator in August, 2007, “the top leaders of the 52,421 largest charities in America earn an average salary of $145,2702.” For example, take the American Red Cross: in FYE 2006 the organization reported almost $6 billion in revenue. The CEO of the organization at that time, Mark Everson, “raked in” a whopping $500,000 in total compensation, according to Charity Navigator (by the way – Chan in his article named “Marsh Evans” as the CEO of the American Red Cross in 2005; in fact the CEO at the time was Marsha Evans, and she resigned 12/13/05). A public company of similar size, State Street Corporation, paid its CEO Ronald Logue a total of $28.3 million in FYE 2007, says an online executive pay database. Now, $500,000 is still $500,000, but I find it hard to believe that Mr. Everson worked in the non-profit sector so that he could “beat the system,” when his peers in the public sector are making over 50 times what he earned with the American Red Cross. Charity Navigator also rates NPOs on how efficiently their resources are spent. This monitoring and regulating ensures that the money non-profits receive is being used effectively. Charities are rated by Charity Navigator based on the percent of their expenses spent on realizing their programs. The American Red Cross, for instance, spends 94% of its expenses on its program, with only 3.3% of expenses devoted to administrative purposes. Another company Chan cites in his article, the College Entrance Examination Board, or the College Board, spends nearly 95% of expenses on its program services according to its IRS form 990 for FYE 2005. I find it hard to believe that we are overpaying for our College Board tests when the organization’s expenses are run so efficiently. I completely agree with Chan’s advice to “choose where your money goes properly.” Luckily, non-profit organizations are heavily regulated under the public eye, something Chan did not realize in the 5/16 article. After diving deeper into IRS forms and charity-rating websites, one cannot help but realize that the CEOs of non-profits are not at all overpaid, and the non-profit sector today is under such intense scrutiny that we can all easily do our “research and choose to support the right causes.” I hope that this letter sheds some light on the important facts that were not mentioned in Chan’s article Sincerely, Declan Cummings ’09
