I gave at the office
By Mike Kroll
As Illinois
creeps toward the new fiscal year in beginning July 1 without a budget Governor
Pat Quinn talks about draconian measures that would have to be enacted under
the “doomsday” scenario. One of the publicly funded sectors of the state
economy yelling the loudest are the legions of non-profit entities who provide
many essential services on-behalf of state government under contract or grant
funding of various state agencies. If you think of a societal problem there is
a non-profit organization devoted to addressing that problem; as long as the
state pays them to do so.
Under
Quinn's doomsday budget many of these agencies will see their state money
slashed or eliminated all together and they are enlisting the media in stirring
up the pot of the citizens-at-large with colorful emotional tales of unmet
needs of our least advantaged neighbors. These non-profit agencies are what
used to be called “charities” and in most cases amount to the state privatizing
services that were once performed by state agencies themselves. Most even
continue to operate in the traditional manner of a caring charity where
dedicated employees work hard for often small wages because the cause is noble
but a growing number of these non-profits have also become a lucrative piggy
bank for a small number of executives at the very top.
Illinois'
economy was a huge mess before the national dilemma and has only gotten
much, much worse since. While Quinn attempts to persuade Illinois lawmakers to
pass a realistic new budget for the next fiscal year that includes additional
state revenues to close the projected $11+ billion gap without wholesale
sacrifices in government services. Meanwhile the leaders of both parties try to
avoid any public responsibility for raising taxes by insisting on further
unspecified budget cuts be devised by Quinn's staff before they will agree to
even a “temporary” tax increase. It seems increasingly unlikely that Illinois
will have a real budget in place anytime soon.
When we
hear or read about the plight of clients who will go unserved as non-profits
are forced to cut services due to far less available state money or the many
lower level employees who will be laid off or terminated due to lack of funds
it does tug at our heart strings. Who doesn't want the developmentally disabled
or the mentally ill or at risk juveniles or victims of domestic violence to be
properly served or protected? It is easy to side with the positions of the
vocal non-profit agencies until you realize that for some non-profit is just a
different way of accounting.
Locally we
have heard much about the impact to chronic mentally ill clients of Bridgeway,
our local community mental health center. Recent lean years before the current
crisis have seen reductions in staff and small or no salary increases for
remaining staff while a small cadre of top Bridgeway managers continue to earn
princely salaries by area standards. Back in 2006, the most recent year in
which data is publicly available the top two Bridgeway officials earned a
combined total exceeding a half million dollars.
By Illinois
statute non-profit organizations operating within Illinois are required to
submit annual reports including their general finances and audit results as
well as the IRS Form 990 tax return for non-profits. This information is
compiled by the Illinois Attorney General's Charitable Trusts Bureau into an
on-line database (www.ag.state.il.us/charities) that is easily searchable by
anyone with an Internet connection. These annual reports “are due within six
months of the organization's fiscal or calendar year end” yet in most cases we
found the most recent available data to be three years old (2006).
The table
accompanying this article shows executive salary data for 18 local non-profits.
The reports require that the salaries of top management or directors be
itemized (including company-paid retirement or other benefits) and asks for the
number of non-management employees earning over $50,000 annually. All of these
organizations depend upon either government money or charitable giving for the
vast majority of their income. The table shows the name and salary of the top
paid administrative employee identified in the reports but only the salaries of
subordinate administrative staff earning over $50,000. This table only
represents a subset of registered non-profits, those with the highest
administrative salaries and others who obtain a very substantial amount of
their budget from government contracts or grants.
No one in
this table compares to the multi-million dollar salaries we hear about on Wall
Street or among the top CEOs of America's largest corporations but some are
exceedingly well compensated by local standards. Consider that Illinois
Governor Pat Quinn is paid $177,000 or that the Illinois median household
income was $54,124 in 2007. It seems curious that while there has been a
public outcry for caps on executive compensation for Wall Streeters there seems
to be little interest or concern about those top charitable executives who pay
themselves handsomely even as they reduce services to clients or layoff general
staff to economize.
Critics of
excessive corporate executive salaries have placed much of the blame on the
boards of directors of those for-profit entities that are responsible to
shareholders to oversee executive compensation but typically recruited by the
corporate CEO. This is really no different at non-profits except often times
the boards apparently answer to no one in the absence of shareholders and their
independence from the non-profit CEO can often be even more suspect.
Clearly a
good number of local non-profits do not over-compensate their executive
leadership and many not included in this table are managed entirely by
volunteers. Is it possible to question the non-profit status of an organization
by virtue of apparently excessive executive salaries? Should the state be in a
position to put caps on the salaries of non-profit executives whose
organizations exist merely to act as a agent of government in providing
services to the poor, the sick or the disabled?
6/18/09