Thanks to The Forward for its annual exposure of the abuses by too many Jewish non-profits of the trust invested in them by our donors.* It just gets worse and worse. For a system totally dependent upon trust -- trust of the donors that their contributions will be applied in a trustworthy manner by the beneficiaries -- too many, way too many of our organizations are throwing money around, often to the undeserving.
Less than one month ago, I wrote of the egregious compensation paid by the Zionist Organization of America to its President (for a position that was, but a few years ago, a voluntary office), and I was chastised at incredible length by it Executive Vice-President for doing so; in the same Post I wrote of the excessive compensation paid by Yeshiva U. to its President, the once-upon-a-time do no wrong Richard Joel. The Forward list for 2015 (reflecting compensation figures for 2014) offers us more excesses than many of us ever thought possible, See the full article at http://forward.com/news/325847/salary-survey-2015/
Let's examine a few but, please note (as I certain you will) that I have only included among these those whose service subjectively appears to fail to reflect any relative return on the often incredible excess being paid:
- Steven Hoffman, President/CEO - The Jewish Federation of Cleveland -- $801,581 At one point in his illustrious career, in the 90s, Steve was earning two salaries -- as CEO in Cleveland and as JFNA CEO. That appeared to continue after Hoffman left JFNA -- but that was a decade ago. (I hope that this is another example of the incredible pension contributions our organizations are supporting.) When Steve Hoffman returned to the Cleveland federation from JFNA, many of us pleaded with Steve to run JFNA from there -- little did we know that five years later he would be -- and still is, just without the title. From time-to-time he also believes that he runs JAFI. If so neither runs well.
- Jerry Silverman, President/CEO -- JFNA -- $672,358. Now you know why he is affectionately referred to on these pages as "Smilin' Jerry." Only real fools would pay this person this much for so little...but they do. He received almost a 9.5% compensation increase between 2013-2014, epitomizing the concept of "failing upward." No you know why he is "Smilin'" -- it surely isn't for organizational success.
- David Harris, President, American Jewish Committee -- $491,766. David is a terrific leader and spokesperson but, really, in 2015 do we even need a Committee? It appears to be no more than a vehicle and platform for...David Harris (who in addition received a gross [not in the sense of "totaling up" but in the sense of "totally gross"] payment of $500,000 for something called "unused vacation days").
- Morton Klein, CEO, Zionist Organization of America, $440,440, a ridiculous amount given that ZOA's "total expenses" are but $4,000,000+/-. His was once a lay volunteer position, converted by Mort to a paid/overpaid position.
- Jerry Fingerman, CEO, Jewish Foundation for Camp -- $460,975. Smiling' J is probably giving his successor compensation advice. Look at how much this minor charity raises for such a vital purpose and the compensation paid its CEO and all one can ask is "huh?"
- Jonathan Greenblatt, CEO -- ADL -- $689,830. This was the attribution of Greenblatt's predecessor, the inimitable Abe Foxman, salary to Greenblatt, his successor. Let's hope the ADL showed better judgment than did JFNA and actually wants to see some results before overpaying Jonathan.
If one asks the question, is anyone on the list "underpaid," I would submit a list of Federation CEOs whose communities are evidencing incredible successes in every area, and are meeting extraordinary challenges with diligence and creativity. Among those: Nasatir, Solomon, Goldstein, Sanderson, Shrage, Adler, Grossman and others. Outside of the federations, one need only look at the success of JNF and ask, on a comparative basis, why is Russell Robinson so underpaid? I applaud...we all applaud...rewarding success; all of us know how to measure success in Jewish organizational work...but success is no longer a job requirement in too many places.
Yet, where there is success by any measurement, there is too often gross under-compensation both absolutely and relatively -- in Pittsburgh, Detroit, Atlanta and Northern New Jersey, to name just three, the CEOs are grossly underpaid. (Maybe the CEOs there should retain Steve Hoffman to negotiate their next salaries.)
The entire list raises a question: do some organizations perpetuate merely as vehicles to overcompensate a CEO? Just asking.
Some will argue that The Forward data once again lumps pay with annual vesting of pensions. Yet, those who make that argument need to also understand that more and more in the private sector, partners and CEOs are now self-funding their pensions rather than being further "rewarded" with the organization paying. But...not at federations.
What has led us to this place? In the compensation sphere, organizational CEOs demand pay, perquisites and pensions equal to or exceeding those in the private for-profit sector. On the other hand, when it comes to the kind of measurements applied to CEOs in the for-profit sector, in too many places non-profit organizational lay leaders are told (or simply understand without being told) "don't go there." It's having "the cake and eating it too" while too many non-profits are in stasis their CEO compensation keeps rising. Can one of you explain this to me?
Yet, where there is success by any measurement, there is too often gross under-compensation both absolutely and relatively -- in Pittsburgh, Detroit, Atlanta and Northern New Jersey, to name just three, the CEOs are grossly underpaid. (Maybe the CEOs there should retain Steve Hoffman to negotiate their next salaries.)
The entire list raises a question: do some organizations perpetuate merely as vehicles to overcompensate a CEO? Just asking.
Some will argue that The Forward data once again lumps pay with annual vesting of pensions. Yet, those who make that argument need to also understand that more and more in the private sector, partners and CEOs are now self-funding their pensions rather than being further "rewarded" with the organization paying. But...not at federations.
What has led us to this place? In the compensation sphere, organizational CEOs demand pay, perquisites and pensions equal to or exceeding those in the private for-profit sector. On the other hand, when it comes to the kind of measurements applied to CEOs in the for-profit sector, in too many places non-profit organizational lay leaders are told (or simply understand without being told) "don't go there." It's having "the cake and eating it too" while too many non-profits are in stasis their CEO compensation keeps rising. Can one of you explain this to me?
What is fully evidenced on this 2015 List is that organizational CEO compensation and benefits are more and more being based less and less on achievement and more and more on "comparables" -- Gosh, if Steve Hoffman is earning $800 thousand, I should be earning at least "X;" if Jerry Silverman could be paid (as opposed to "earning") $672 thousand, I should be earning "X+." If the argument is that "our" CEOs should be compensated at a level equal to (or exceeding) what CEOs in similar-sized for profit companies are earning, then, as in the for-profit world, "our" CEOs must demonstrate achievement and organizational growth, something too often (as at JFNA or The Jewish Foundation for Camp) ignored or set aside.
The whole thing is an embarrassment...and a growing one.
Rwexler
* It appears that in an effort to compare "apples to apples," The Forward has chosen to list organizations by "total expenses." If available, total revenues might offer a better basis for weighing compensation (at least for federations).
oh richard, richard
ReplyDeletedo you really feel that the comp numbers are comprehensive?? Do you really think every Federation is reporting the whole story?? Do you really believe that your Steven Nasatir receives significantly less than Cleveland's Steven Hoffman? The good professionals deserve to be recognized and appreciated. The ones with no track record, just lumped into the bunch, really don't. Maybe the packages are too high, maybe too low, but apparently the market is what the market is. And, than our cherished system has the problem of zero none nada bench strength. Whose fault? Principally JFNA. When folks retire, we have no logical pool to go to. Tragic. This is an area that needs our leadership attention. any takers?
Given the opening part of Richard's previous "Javert" post, I suggest that salaries be based upon FBI payscales That would save us money and also better reflect services rendered.
ReplyDeleteI don't know if you are aware of the document from Guidestar on the issue of Excess Compensation or the IRS regulations. If not, check this link. https://www.guidestar.org/ViewCmsFile.aspx?ContentID=3890.
ReplyDeleteHere's one important excerpt. "Nonprofit compensation practices can also draw fire from the IRS.
The IRS is charged with enforcing the Federal Private Inurement
Prohibition, which strictly forbids a tax-exempt organization’s decision
makers—board members, trustees, officers, or key employees—from
receiving unreasonable benefits from the nonprofit’s
income or assets. Excessive compensation paid to nonprofit executives
is the most common violation of this prohibition,1
and it can
cause the IRS to levy hefty fines on the persons involved."
What's allowed? Charities can pay their executives market rate.
• Market rate is determined by researching what someone in a
similar position would earn at an organization that is of the
same size and has a similar mission or field of activity.
• Charities can look at for-profit compensation when determining
market rate, as long as the job, organization size, and
organization mission/purpose are comparable.
What are the consequences? Consequences of Not Following the Rules
Penalties for excess compensation range from fines to revocation
of an organization’s tax-exempt status. Fines are the more
likely consequence. Known formally as excess benefit transaction
excise taxes and informally as intermediate sanctions, the fines
can be levied on both the executive who received the overpayment
and the board members who approved it or who knew
about the excess but did nothing to prevent it. For example:Say the executive director of ABCD Charity received a compensation
package of $250,000 in FY 2008. After an examination
(or, in layperson terms, an audit) of the organization, the IRS
establishes that $150,000 was the appropriate compensation for
the position at that time. As a result of this determination: The IRS requires the executive director to repay the
$100,000 overpayment to the organization—with interest.6
If the executive director fails to repay this amount, or repays
only part of it, a 200 percent excise tax may be imposed on
the amount yet to be repaid.7
• The IRS may require the executive director to pay an excise
tax equal to 25 percent of the overpayment. In this example,
the excise tax would be $25,000.8
• The IRS may require each board member who approved the
excess compensation, or any board member who knew about
the excess but failed to prevent the overpayment, to pay an
excise tax equal to 10 percent of the overpayment, not to
exceed $20,000 per transaction.9
In this example, should
the IRS decide to impose the excise tax, each board member
would owe $10,000.
Our federation board annually (or at contract renewal) reviews the terms and compensation of the CEO with full transparency. I wonder if others do also.
Are you or anyone aware of these findings and penalties against any federation, federation CEO or Jewish organization CEO? I wonder if there are any"finders fees" for whistle blowers?
Richard:
ReplyDeleteYou of all people know darn well that Steve Nasatir makes far beyond what is listed as his salary. He and some of the longtime senior heads (read older males who just would not step down for younger, often deserving female, talent) signed lucrative deferred compensation deals many moons ago.
I would suggest that the real shanda is not the pay of CEOs, but the enormous disparity between CEO compensation and the compensation of other staff. It is common at Jewish organizations for the CEO to make 2, 3, or 4 times what the next highest paid professional receives. How much more so for the rest of the staff!
ReplyDeleteTo the Anonymous Commentator whose attack on a Federation CEO who recently left his position I just rejected, I don't know that your allegation of a "firing" was true and, if not, your allegation was defamatory.
ReplyDelete