Should a Nonprofit Pay Its President and Key Staff?
Peter Drucker, the renowned management guru, emphasized that managing a nonprofit organization is no different from managing a for-profit one. As leaders, they should be compensated according to their performance. Paying the president and key staff is crucial for the smooth operation and success of a nonprofit organization.
Professional Pay for Professional Performance
Nonprofits rely heavily on professionals to achieve their mission effectively. Unlike volunteers who can accomplish a lot, effective senior managers are invaluable and deserve their salaries. For instance, the ASPCA and Humane Society pay their veterinarians and animal protection officers. Meanwhile, PETA, which brings in $50 million annually, even has a law firm on retainer for legal cases. Imagine the potential impact on animal welfare if this money was used to enhance their programs!
The Myth of Charity
Our traditional notion of charity is incorrect. Effective fundraising, efficient spending, and managing an organization to support its missions are tasks for professionals, not volunteers. Volunteers can do great things, but senior managers who are well-versed in leadership are worth their weight in gold and should be adequately compensated. This way, they can continue to improve their organizations and truly make a difference.
Legal and Operational Considerations
In the United States, it is technically possible, though not common practice, to pay board members. However, it is generally frowned upon, and payments to board members are not the norm. For staff members who do not have board voting privileges and have less potential for conflicts of interest, the practice of paying them is widespread. The 990 tax report required for nonprofits can provide insights into such compensation.
The Red Cross Model
My past experience volunteering with the Red Cross for 15 years, from high school to a few years after college, highlights the need for paid staff. Although many staff members took a pay cut to join, the organization could not survive without a salaried team. Nonprofit organizations do not operate without expense.
Leaders Who Donate
Not everyone who leads a nonprofit organization needs to be compensated. For instance, Elizabeth Dole, former head of the Red Cross, donated her first year's salary back to the organization and donated nearly half of her speaking fees. Despite this, she and her husband, Senator Robert Dole, did not need these funds. This practice shows that some leaders do not seek or require payment but ensure the organization thrives by contributing their earnings to its mission.
Conclusion
In conclusion, paying the president and key staff members is not only necessary but also a sign of a well-managed nonprofit organization. Without professional leadership, nonprofits may face mismanagement and fail to achieve their goals. Recognizing and compensating the talents and hard work of these leaders is essential for the sustainability and success of nonprofits.