I don't fully understand the "why" but the Times-Picayune decided to conduct an examination of New Orleans' nonprofit executive salaries. The not-so-surprising finding is that some execs, those who run really large nonprofits, are paid more than execs that don't. Stories about exec pay often focus on whether the execs are being payed too much for doing "charity" work. The long-standing attitude is that folks who do "charity" work shouldn't be paid as much as those who do work for-profit. Another often discussed focus on exec pay is the percentage or proportion of donor money used to pay execs versus provide direct service. The use of donor money is a serious matter but simply linking exec pay and direct service does not provide enough of an explanation as to whether donor money is being used appropriately, effectively and/or efficiently (partially because a huge chunk of many nonprofit exec's time is directly associated with service delivery).
All that said, the Times did its analysis and did a fine job talking about the full range of considerations in a nonprofit board's setting its exec salaries. And oh yes, the real story is about what goes into a nonprofit board's considerations for setting their only employee's salary and benefits (remember: boards only have 1 employee). So sit back and read - there is much to consider.
The 10 highest-paid nonprofit executives in New Orleans: How much they make and why
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on September 22, 2016 at 9:43 AM, updated September 22, 2016 at 10:39 PM
Deciding how to compensate top leadership can be an even tougher balancing act for nonprofits, said Rick Cohen, spokesman for the National Council of Nonprofits. Organizations need to make sure the bulk of the money they get in donations and grants funds their social mission, he said.
Though nonprofits are not automatically exempt from paying federal or state taxes, many do not -- a factor that invites closer scrutiny to salaries."We're also competing for the same talent the for-profit sector is, the same people who need to feed their families and pay off their student loans," Cohen said.
A look at tax records for more than 230 nonprofits in New Orleans shows compensation for CEOs and other top-paid employees varies widely depending on the sector and size of the organization. In general, the larger the organization is and the more national in scope its peer group, the bigger its paychecks are.
At least 17 nonprofit executives in New Orleans make more than $300,000 a year, including three who were paid more than $500,000 for the year, according to a NOLA.com | The Times-Picayune analysis of the latest IRS filings available and Guidestar.org reports.
|Top 10 highest-paid New Orleans nonprofit executives|
|Rank||Name||Title||Nonprofit||Most recent salary|
|1||Paul Hoolahan||CEO||Allstate Sugar Bowl||$639,932|
|2||Michael Hecht||CEO||Greater New Orleans Inc.||$559,000|
|3||Ron Forman||CEO||Audubon Nature Institute||$528,226|
|4||Nick Mueller||President and CEO||National World War II Museum||$490,834|
|5||Karl Benson||Commissioner||Sun Belt Conference||$440,001|
|6||Stephen Perry||CEO||New Orleans Convention and Visitors Bureau||$439,840|
|7||Robert Crifasi||General Manager||New Orleans Country Club||$424,714|
|8||Jeff Hundley||COO||Allstate Sugar Bowl||$405,152|
|9||Arnold Lupin||President||Lupin Foundation||$352,812|
|10||Byron Harrell||President and CEO (former)||Baptist Community Ministries||$349,848|
|Internal Revenue Service|
The analysis looked at nonprofits headquartered in New Orleans that reported more than $500,000 in income. Guidestar defines income as money an organization gets from contributions, grants and the performance of services before certain costs -- rental expenses, sales expenses, direct expenses, costs of goods sold -- are subtracted.
This top 10 ranking does not include executives at higher education and health care nonprofits, sectors that typically pay much higher salaries. Executives in nonprofit health care were ranked separately for this project.
In interviews and statements, the city's largest -- and highest paying -- nonprofits pointed to peer-to-peer comparisons as a driving factor behind pay decisions. NOLA.com | The Times-Picayune sought comment from all the nonprofits found in the top 10 list.
Audubon Nature Institute, which runs 10 local museums and parks and is among the city's largest nonprofit employers, did not make a representative available for an interview, instead sending email statements with a list of national institutions it compares itself with for pay purposes. The list included the Chicago Zoological Society, the National Aquarium in Baltimore and the Georgia Aquarium as well as local institutions such as the Sugar Bowl and the New Orleans Country Club.
Audubon CEO Ron Forman is the third highest-paid nonprofit executive in the city, making $528,226 in 2014. Forman was among six Audubon executives who earned six-figure salaries that year, including chief of staff Bill Kurtz and vice president of food and beverage Richard Buchsbaum.
In an emailed statement, Audubon spokesman Frank Donze said Audubon employs more than 1,000 people and oversees multiple parks and museums, factors that make it unique. The board's compensation committee uses a wide range of market data to review and recommend pay packages for Forman and Kurtz, he said. The entire board then reviews and approves the pay packages.
The statement said pay for Forman, chief executive for 40 years, and the executive team reflects successful efforts to turn Audubon from "a struggling zoo to an array of world-class attractions, parks and facilities."
Ray Jeandron, who chairs the compensation committee for the Sugar Bowl board, said salaries for its top leadership are competitive with other college football bowl organizations.
"We really are in a national business. We're competing against the largest bowls in the country," Jeandron said, adding executives sit at the negotiating table with major TV networks and national sponsors.
The Sugar Bowl's two highest-paid executives -- CEO Paul J. Hoolahan and chief operations officer Jeff Hundley -- are also among the highest paid in the city. Hoolahan topped the list, making $639,932 in 2014. Hundley ranked eighth at $405,152.
Jeandron said the board hires an outside compensation consultant for about $10,000 a year to complete performance reviews and provide pay ranges to guide in compensation decisions. Performance factors include tickets sales, new sponsorships and major event deals.
Jeandron said Hoolahan and Hundley have led efforts to develop the Sugar Bowl and roughly 50 other amateur athletic events. In January 2015, the Sugar Bowl joined a three-year rotation with the Rose, Orange, Cotton, Peach and Fiesta bowls to host a semifinal game as well as a Southeastern Conference and Big 12 conference championship game.
Sugar Bowl leadership "deserves to be paid at or near the top levels of all the bowl executives in the country," Jeandron said. "We're not embarrassed by the level of pay we have."
To be sure, looking at compensation figures for a single year provides a snapshot of pay for that moment. For example, roughly $200,000 of Lupin Foundation President Arnold Lupin's 2014 pay was compensation deferred over 20 years, said Louis Lupin, the organization's treasurer.
Greater New Orleans Inc. CEO Michael Hecht, the second highest paid nonprofit executive in the city, earned $559,000 in 2014. That included $50,000 in deferred pay from a previous contract.
Leslie Jacobs, a Greater New Orleans Inc. board member, said measurable factors such as the number of companies attracted to the area, jobs created, public policy achievements and brand awareness factor into Hecht's pay.
Jacobs noted Hecht, a graduate of Yale University and Stanford Graduate School of Business, is a central figure in the region's economic development efforts. Making sure his pay is comparable to peers in cities such as Philadelphia, Atlanta and Houston is a priority for the board, she said.
"High performers do not come cheap and they're wooed all the time," Jacobs said.
In emailed statements, board members for the Convention and Visitors Bureau, said CEO Stephen Perry and his team manage a giant economic engine that markets the city through three domestic travel offices and five overseas, amounting to, as businessman and board member Greg Rusovich put it, "what is virtually Louisiana's third Fortune 500 company."
The board reached Perry's $439,840 compensation in 2014 by looking at what his peers were paid in 10 competing U.S. cities. The board then took the average of the five lowest paid executives.
Where the money comes from is also a concern. New Orleans' hotel tax is a key source of funding for the board. Steve Pettus, board treasurer and managing partner at Dickie Brennan & Co., said board rules specifically stipulate CEO pay must be funded by private sector dollars.
The National World War II Museum uses benchmark data from 17 local and national organizations to set pay, including the Audubon Nature Institute, the Colonial Williamsburg Foundation, the Field Museum of Natural History in Chicago, the U.S. Holocaust Memorial Museum in Washington, D.C., and the Intrepid Sea, Air & Space Museum in New York City.
The museum board also relies on data from the American Alliance of Museums and Southeastern Museums Conference.
Gordon H. "Nick" Mueller, president and CEO of the museum since it was founded, made $490,834 in 2015, ranking fourth among nonprofit executives in the city. Five top museum officials ranked within the top 30 highest-paid local executives.
Chief operating officer Stephen Watson said the National World War II Museum has gone through "dramatic growth" in recent years, morphing into an institution that is one-of-a-kind in the region. The museum is expected to welcome 700,000 visitors through June 2017, up from 100,000 in 2009. Its staff has increased from 75 to 300 employees.
Watson, who made $232,344 in 2014, said salaries have to remain competitive with major national institutions if that growth is to continue.
"We're building a world class museum in New Orleans," Watson said. "We're telling a big story and we're doing it with the best talent and at the highest level."
How is nonprofit pay set?
The IRS requires a committee of independent nonprofit board members to review compensation for top-paid executives. But what exactly goes into determining pay?
In recent years, executive paychecks in the for-profit world have hinged increasingly on performance measures, including how much profit a company makes and sales goals. Such metrics can be harder to pin down for nonprofits.
Take a food bank, for example. If the goal is to end hunger, should an executive director be judged on the number of meals the organization serves? Or is it better for business when demand is low?
"It's really about seeing that inch-by-inch progress, which is very difficult to write into a contract" for many nonprofits, said Cohen, with the National Council of Nonprofits.
Kelly Pepper, executive director of the Louisiana Association of Nonprofit Organizations, said more nonprofit boards are using performance measures -- such as fundraising goals, programs launched and services offered -- to determine what they pay executives.
For the most part, however, boards still rely heavily on comparison -- looking at what similar organizations pay and making sure they are competitive, Pepper said.
IRS rules already require nonprofit boards to obtain market data for comparable positions in for-profit and tax-exempt organizations when setting pay for top brass. Pepper noted the largest nonprofits hire consultants and buy compensation reports to scope out the market.
Boards also have to consider the type of person they want leading their organization, Pepper said.
"Executive directors are the face and voice of our organization. Our personalities, our character, our honorability, our worth is a reflection of our organization," Pepper said. "What is the value of that?"
Looking at the highest-paid individuals only provides a slice of the overall picture. More than half of the roughly 500 executives and top-paid employees included in the analysis made less than $100,000 a year in 2013, the year with the most complete data available. Again, professionals in the nonprofit health care sector were examined separately.The Louisiana Association of Nonprofit Organizations surveys Louisiana nonprofits every three years to see what they are paying, reporting median pay for more than 100 jobs by nonprofit budget and total employees. The most recent survey released in August shows CEO pay ranged from $60,331 a year for the smallest nonprofits (with budgets less than $250,000) to $137,200 a year for the largest (budgets exceeding $10 million). A total of 835 nonprofits responded to the survey.