Like private businesses, nonprofit groups must offer competitive salaries to keep top leaders.
In business, the axiom “you get what you pay for” often rings true. And if a business wants to keep its top talent, it has to be competitive, offering its leadership salaries and benefits in line with its industry.
The same goes for nonprofits.
Salaries for Lawrence’s nonprofit leaders vary widely, according to a report in Sunday’s Journal-World. Each nonprofit examined performs what the Internal Revenue Service considers charitable, tax-exempt work. That’s everything from serving the poor to running the Kansas University Endowment Association to operating Lawrence Memorial Hospital.
The Journal-World’s examination of public tax documents for 90 local nonprofits showed the heads of such organizations are paid anywhere from less than $20,000 to more than $400,000 a year.
The median nonprofit director salary in Lawrence was about $57,000, far lower than the median nonprofit director salary nationwide of about $147,000, according to Charity Navigator’s 2010 Compensation Report. And half of the local directors’ annual salaries are between $42,000 and $81,000.
Yet 18 local nonprofit directors make more than $100,000, with six making more than $200,000. Four of the top five highest-compensated directors — all making more than $300,000 — work for organizations affiliated with KU, including KU Athletics, KU Endowment, the KU Alumni Association and the KU Center for Research. LMH president Gene Meyer makes about $440,000.
There is no indication these top salaries are out of line given the multi-million-dollar budgets and hundreds of people employed by the KU and LMH operations. With higher budgets comes greater responsibility and fund-raising needs, and often a bigger salary for the director. At the same time, it is important that boards of these organizations are careful in their deliberations of leadership salaries. They need to make sure salaries are not so high that donors decide too much is spent on administrative salaries rather going toward meeting the organization’s mission.
KU strives to be a national player in academics, research and athletics. And under Meyer’s leadership, LMH has improved its services and offerings, becoming a competitive option in northeast Kansas’s health-care system. Meyer’s compensation should be competitive.
The top nonprofit directors are exceptions. Most of Lawrence’s charitable leaders are working with dwindling resources and shrinking budgets. Thirty-six of the 90 local directors make $50,000 or less. Their compensation is often much lower than their for-profit business counterparts.
It’s common, the Journal-World’s report found, for these directors to be serving out of dedication and commitment to the community. They likely can take their services to the for-profit sector and make a higher salary but don’t.
For those working in this capacity, Lawrence owes them a debt of gratitude.