Executive pay and the donor

The Wall Street Journal recently reviewed the tax filings of some major arts institutions and reported several paid their executives more than $1 million dollars in 2013.  For example, Museum of Modern Art (NYC) Director Glenn Lowry "took home $3.4 million, nearly five times his base salary" when perks and bonuses were factored into the equation.  Not too shabby.

Putting aside the larger moral or ethical question about whether high pay for nonprofit executives is right--a very tangled and gnarly question--I would instead ask nonprofits to focus on the role of executive pay in the context of donor relations at their own organization.  What happens at MoMA is for MoMA to worry about and each organization is unique, so understanding how donors to your particular group will react to executive pay is what is important.  This means 

1. Thinking about pay in terms of your group's mission and public image
2. Getting to know your donors and how they feel about this issue, which can be a scary conversation to start

The good news about #2 is that beginning the conversation will probably result in new, unexpected conversations beyond pay scale that will illuminate the nuances of your donors and lead to better fundraising in the future.

I would start with #1, because this is something you can do in-house and knowing your own thoughts (and thoughts of other staff) will help you anticipate what your donors might think and the questions they may have about this issue.  These are the questions I would ask to get the ball rolling: 

• How would I justify the salaries of our leadership if a donor asked?
• What role do fair wages play in the realization of our organization's vision?  For example, if a vision is a world without hunger then many people might say fair pay is a part of realizing that vision.
• Is transparency important?  For example, if a salary is less than the minimum required to be reported on the IRS 990 tax form will you still want to make that information publicly available and, if not, why?
• Would you be hesitant to donate to an organization with the same mission as your own if you knew they paid their leadership more than what you pay your leadership?  Less than?  Same as?
• What is an acceptable executive to worker pay ratio?

I'll come back to #2 in a future post, because this seems like more than enough food for thought for one day.

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