Saturday, February 27, 2016

Charitable Compensation: You may surprised How much Profit some Non-profits Earn. Some myths debunked.

The following efficiency information is derived from the Charity Navigator web site, the GuideStar web site and Forbes magazine's November 2009 special report on the 200 Largest U.S. Charities. Salary information is taken from Schedule J (Compensation Information) of the various charities' IRS Form 990 filings, an annual reporting return that certain federally tax-exempt organizations must file with the IRS which provides information on the filing organization's mission, programs, and finances. (In the context of this article, the term "efficiency" refers to the percentage of total budget/expenses that each listed organization spends on providing charitable programs and services, while the term "compensation" or "pay" includes salary, one-time payments, and deferred compensation.) 

  • UNICEF: The e-mail is not specific about which executive is being referred to here, as UNICEF (the United Nations Children's Fund) is a global organization with offices in 190 countries. We're assuming the reference is to the President and CEO of the United States Fund for UNICEFCaryl M.Stern, whose last reported total yearly compensation was $472,891, not $1,200,000. Both Charity Navigator and Forbes rate this organization's efficiency at 91%, far greater than the 14% claimed in the e-mail cited above. In response to the claim that UNICEF's CEO receives "a Royal Royce for his exclusive use where ever he goes," UNICEF told us that "There is no Rolls Royce or company car provided for any staff member at UNICEF or the U.S. Fund, including thePresident and CEO of the U.S. Fund or UNICEF’s Executive Director.
  • American Red Cross: The information presented above is outdated (as of October 2010), asMarsha J. Evans resigned her position as CEO of the American Red Cross in 2005. The current President and CEO of the American Red Cross (since 2008) is Gail J. McGovern, whose total yearly compensation for 2010 was about $1,037,000 (considerably higher than the $651,957 figure mentioned above) and for 2011 was about $561,000. Charity Navigator and Forbes both rate this organization's efficiency at 92%, much higher than the 39% figure claimed in the e-mail.
  • United Way: The United Way is another charitable organization that operates on both global and local levels. We're assuming the e-mail references the President and CEO of United Way Worldwide,Brian A. Gallagher, whose last reported total yearly compensation was $717,076 (including a base salary of $415,613, which is a bit higher than the $375,000 figure reported above). Charity Navigator rates this organization's efficiency at 89%, while Forbes rates it at 85%, both much higher than the 51% efficiency claimed in the e-mail.
  • World VisionWorld Vision is yet another charitable organization with global reach, but the message quoted above specifically references World Vision Canada. That organization provided us with the following information: 
    Dave Toycen [President and CEO of World Vision Canada] salary is $184,000 which is a matter of public record. As per our Board's compensation policy, Dave and all of our top executives earn substantially less than executives who run comparable organizations. This policy is overseen by our Board's Executive Committee and is regularly assessed by an independent external consultant. We disclose executive compensation as required to the Canada Revenue Agency.

    Dave does not live in a $700,000-$800,000 home, and none of his housing costs are paid for by World Vision. He has lived in the same house outside of Toronto for more than 20 years.He travels economy class and does not use the most cutting edge technology.

    Accountability in the use of funds and transparency to our donors are among our core values and they are taken seriously at World Vision. As evidence of this:

    The facts about our executive compensation, including the President's renumeration, are published openly on our website;

    - Our annual report and independently audited financial statements are also available for review.
    World Vision Canada's (self-reported) efficiency is 81%, much higher than the 52% figure claimed above.
  • Salvation Army: The information presented above is outdated, as W. Todd Bassett stepped down as National Commander of The Salvation Army in April 2006; the current National Commander of the Salvation Army (since 2010) is William A. Roberts. The Salvation Army is not required to file aForm 990 with the IRS because it is primarily a religious organization, but according to the Better Business Bureau (BBB), Roberts' last reported total annual compensation was $126,920, much higher than the $13,000 reported above. Forbes rates this organization's efficiency at 82%, a fair bit lower than the 93% figure claimed in the e-mail.
  • GoodwillGoodwill Industries International is not a business that takes in donated items and resells them for a profit. It is a not-for-profit organization that provides job training, employment placement services and other community-based programs for people who have disabilities, lack education or job experience, or face employment challenges. Goodwill raises money for their programs through a chain of thrift stores which also operate as non-profits.

    The CEO of Goodwill Industries International is not Mark Curran, nor does he make $2.3 million a year. The current President and CEO of Goodwill is Jim Gibbons, who in 2011 received a total reported compensation of $725,000.
  • March of Dimes: Charity Navigator rates the March of Dimes' efficiency at 64.6%, a fair bit lower than most of the charities mentioned here, but much higher than the 10% figure claimed in thee-mail example quoted above.
  • St. Jude Children's Research Hospital: Charity Navigator rates the efficiency of St. Jude Children's Research Hospital at 70.3%, considerably lower than the 100% figure claimed of it above.
  • Ronald McDonald Houses: Ronald McDonald House charities operate at local levels in dozens of different metropolitan areas in the U.S. with varying levels of efficiency. Charity Navigator rates the efficiency of the parent organization at 89.5%.
  • Lions Club International: Charity Navigator rates the efficiency of the Lions Clubs International Foundation at 83.9%.

A 2011 addendum to the original message presented the following information: 
The American Legion National Commander receives a $0.00 zero salary.
The Veterans of Foreign Wars National Commander receives a $0.00 zero salary.
The Disabled American Veterans National Commander receives a $0.00 zero salary.
The Military Order of Purple Hearts National Commander receives a $0.00 zero salary.
The Vietnam Veterans Association National Commander receives a $0.00 zero salary.
The Wounded Warriors National Commander receives a $0.00 zero salary. These organizations with no salaries have donations going to help Veterans and their families and youth.
According to the most recent available Form 990 filings, all of these statements are false and/or misleading (in large part because the National Commanders are not necessarily the top business executives of these organizations):

  • The two men who served as National Commander of the American Legion during the 2009 tax year (David Rehbein and Clarence Hill) received total aggregate compensation of $103,701. The American Legion's National Adjutant (Daniel Wheeler), who is described as "the administrative head of the organization," received $201,661 in total compensation.
  • The two men who served as the Veterans of Foreign Wars' Commander-in-Chief during the 2009 tax year (Glen M. Gardner, Jr. and Thomas J. Tradewell, Sr.) received an aggregate total compensation of $329,868.
  • In the 2009 tax year, the National Adjutant of Disabled American Veterans (Arthur H. Wilson), who is described as "serving as the DAV's chief executive officer," received a total compensation of $328,252.
  • The Military Order of the Purple Heart (MOPH) is a separate entity from the Military Order of the Purple Heart Service Foundation (MOPHSF), although the former is largely dependent upon the latter to raise funds for its programs. For tax year 2009, the Executive Director of the MOPHSF (Gregory A. Bresser), who left that post in August 2009, received $142,986 in total compensation.
  • In tax year 2009, the President of Vietnam Veterans of America (the closest match to the "Vietnam Veterans Association" mentioned in the e-mail), John Rowan, received a total compensation of $69,874. (The highest paid executive was CFO/staff director Joseph Sternburg, who was paid $137,902.)
  • For the fiscal year ending September 2013, the Executive Director of the Wounded Warrior Project, Steven Nardizzi, received a total compensation of $375,000.

Unfortunately, the six veterans-related charitable organizations mentioned above don't receive very high marks for efficiency (as determined by Charity Navigator, the BBB, or Form 990 information): 
  • American Legion: 55%
  • Veterans of Foreign Wars: 84%
  • Disabled American Veterans: 77%
  • Military Order of Purple Heart Service Foundation: 35%
  • Vietnam Veterans of America: 25%
  • Wounded Warrior Project: 58%

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