Reporting nonprofit pay: No news, old news or good news?

Larry Levin

BY LARRY LEVIN

A bunch of folks have asked me recently what I thought about the news reported in the St. Louis Business Journal about the compensation of local Jewish agency executives. Most noteworthy to some was the line item of about $881,000 that outgoing Federation President and CEO Barry Rosenberg received in 2010.

Federation Chairman Bob Millstone sent an email out to the community to correct what he described as the “extremely misleading” nature of that particular figure, and to explain from whence it derived. The footnotes of the Business Journal article indicate that of the total compensation, $573,806 was from a supplemental retirement plan distribution. As Millstone explained, this “stay fund,” created in 1998, reserved $38,200 a year for 12 years, with the total being  paid only if Rosenberg remained at the Federation through 2010. Millstone also indicated that Rosenberg’s salary and compensation was relatively low compared to that of Federation chief professionals in the 18 biggest markets.

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 Several times after the Business Journal report, the question arose, “Aren’t you going to cover this?” implying that it’s relevant, even important, news for the Jewish community. For the most part, I have responded (in less artful words, to be sure) that there’s not much news here, but that the subject of executive compensation does raise some interesting questions worth exploring in a more analytical, less visceral manner than the tone accompanying the inquiries I received.

When I say there’s not much news, I’m dead serious. The commitment to create the “stay fund” for Rosenberg, that accumulated over many years and thus was reflected by a large lump sum in the 2010 compensation figure, was made in 1998.  Unless the decision to create the fund involved malfeasance or was deliberately concealed from the community (for instance, the apparent efforts by Barclays to conceal the misreporting of interest rates), an action that took place 12 years ago is the antithesis of news.  And the implementation of the plan, resulting in a large payout, is not news, at least not in thebreaking sense.

 As for the particular Federation decision — I wasn’t on its board in 1998 so I can’t say what happened inside the boardroom, any more than I am able to do so currently, during the hiring of the agency’s new President and CEO, Andrew Rehfeld.   We can speculate about the myriad factors that might have been discussed behind closed doors as to Rosenberg’s retention  – for instance, his performance to date; an actual or perceived scarcity of quality candidates in the marketplace and  the ability (or lack thereof) to attract national-class professional leadership to St. Louis; and the need for organizational continuity.

 In an ideal situation, these questions are (or at least should be) fairly discussed and debated by a board of capable directors, who are fiduciaries of the donors’ funds. A board that represents a good cross-section of a community, isn’t prone to cronyism, and has the best interests of its organization at heart, is the most likely group to make a rational, market-based decision that doesn’t wander more than a standard deviation from a competitive median. It’s not a perfect system, to be sure; but given a comparison with any other system, it’s the one I’ll take any day of the week.

Don’t get me wrong – it’s very good to have the data generally available, and I’m glad it’s published; that’s what informs effective and open discussion about the wisdom of such arrangements. Many issues, including retention agreements, performance bonuses and other creative compensation structures, are the subject of ongoing healthy debate in the nonprofit world.

 It is fine for readers to desire financial data about Jewish nonprofits, including the salaries of their executive directors. With tools like GuideStar.org, nonprofit leaders’ salaries (including my own) are often accessible via the organization’s 990 tax forms filed with the Internal Revenue Service.

Armed with this data, an interested community, vested in the outcomes of its nonprofits, has several ways to provide oversight. One is to ensure capable board governance through community cultivation and leadership training such as the Millstone Institute provides. Another is to reward well-run, mission-driven organizations financially with contributions and other support, as the Jewish community has done with the Federation. Yet another (not at all relevant in this particular context, but which we’ve sadly seen regarding other nonprofits in the St. Louis community from time to time) is by laws that protect nonprofits and their donors from fraud, waste and violations of public policy.

At the Light, we’ll have to consider if it’s a worthwhile exercise to compile and publish such data contained within local Jewish nonprofits’ tax filings.  While I have no objection to making this kind of information available, I think to do so without research into market comparables and other factors relating to compensation  is somewhat irresponsible, and provides only a limited slice of the story.

While some say that a little information is better than none, the assumptions that can be made with only the barest of data can be incomplete at best and erroneous at worst.  Sharing compensation data for nonprofits can be the start of a valuable conversation, but can also cause a Greek chorus effect, in the form of a quick thumbs up or down, to ensue. That’s not the kind of critical thinking needed to assess how we pay our nonprofit executives.

 

Table: Federations’ Executive Salaries

Federation name Federation’s Reported Income Executive’s Compensation Executive’s Name, Position
 Jewish Federation of St. Louis  $17,690,464  $269,366*** (base compensation)  Barry Rosenberg Ex VP.
United Jewish Appeal-Federation Jewish Philanthropies of New York Inc.
$260,755,000
$462,000**
John S. Ruskay, Executive Vice President and CEO
Jewish Federation of Cleveland $57,028,958 $640,295** Stephen Hoffman
Jewish Federation of Greater Kansas City  $6,702,148 $193,351*** Todd Stettner Executive Director
Minneapolis Jewish Federation $16,108,921  $308,838** Joshua M. Fogelson, CEO
Jewish Fed Metropolitan Chicago $74,327,638 $458,352**ƒ Dr Steven B Nasatir, Chief Executive
Jewish Fed of Greater Washington $26,270,417  $391,380** Mikhail Galperin CEO, Exec. VP
Allied Jewish Fed of Colorado $10,888,202 $236,674** Doug Seserman President and CEO
Associated Jewish Community Federation of Baltimore $42,764,118 $477,859** Marc B Terrill, President
United Jewish Federation-Jewish Fed. Of Greater Pittsburgh $19,127,533 $230,000* Jeffrey Finkelstein, Chief Executive
Jewish Federation of Greater Philadelphia $39,194,442 $457,784** Ira M. Schwartz, CEO
United Jewish Federation of San Diego $8,586,935 $240,000***  Steven J. Morris, President and CEO
Milwaukee Jewish Federation $19,270,188 $253,351** Richard Meyer, Executive Vice President
Jewish Federation of Greater Atlanta $27,393,862 $307,050** Steven Rakitt, President
Jewish Federation of Madison, Inc. $2,339,722 $122,443*** Steven H Morrison
Jewish Federation of Northern New Jersey $14,460,457 $248,400** Howard Charish, Executive Vice President
Jewish Federation of Nashville and Middle Tennessee $2,000,701 $139,786** Steven Edelstein, Executive Director
Jewish Federation of Metropolitan Detroit $41,154,211 $347,842** Robert Aronson, Former CEO/Secretary
Jewish Federation of Cincinnati $9,539,539 $268,297*** Shepard Englander, CEO
       
We utilized the most recent 990 form available on www.guidestar.org (noted below).    
*=2008      
** = 2009      
*** = 2010      

 ƒ Nasatir receives salary from JFed Metro Chicago and Jewish United Fund of Metro Chi, which has income of $90,818,533

     
Information on compensation taken from Form 990: Part VII – Compensation of officers, directors, trustees, key employees, highest compensated employees and independent contractors