The Involuntary Vow of Poverty:

Probing Perceptions of Non-Profit Compensation

In Partial Fulfillment

of the Requirements for the Degree of

Master of Arts in Philanthropy and Development

Saint Mary’s University of Minnesota

Winona, Minnesota

by

Aaron Dustin Sanderson

(June, 2012)

2

M.A. in Philanthropy and Development

As administration and faculty of Saint Mary’s University of Minnesota, I have evaluated

the FINAL CAPSTONE PAPER:

The Involuntary Vow of Poverty: Probing Perceptions of Non-Profit Compensation

by

Aaron Dustin Sanderson

and recommend that the degree of Master of Arts be conferred upon the candidate.

James Ollhoff, Ph.D. Date

Program Director

3

Acknowledgements

The writer is grateful to the following individuals and groups who were

instrumental in the completion of this paper:

Association of Fundraising Professionals

BC Children’s Hospital Foundation

Cohort 20 of the Saint Mary’s University of Minnesota Philanthropy & Development

program

Gary A. Kelsey, Ed.D.

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Abstract

Non-profit compensation in the USA and Canada has been an increasingly

popular subject of public dialogue over the course of the last decade. The implications of

this debate not only affect the livelihood of current and future non-profit professionals,

but also represent a relatively substantial allocation of the resources held in trust by the

organizations at which they are, or will be, employed. For this reason, it is imperative to

examine the facts that inform this debate, identifying gaps in the body of knowledge and

determining if unsupported mental models persist in society.

This study reveals that the vast majority of literature on this subject is not based

on research. Many of the publications identified are entirely based on opinion, and the

majority of these works are critical of current non-profit compensation practices. Of the

articles supported by limited data, comparative analysis demonstrates that non-profit

professionals are compensated less that those employed in for-profit. Some theories are

offered to explain this differential, though they too remain to be tested by research.

Though additional research is required to determine conclusive results, the

combination of profound public criticism with this comparative analysis demonstrating

lower compensation supports the idea that a mental model exists. Should this be true,

this social construct reinforces the notion that Canadian and American individuals

employed in the non-profit sector ought to be compensated less than those employed in

the for-profit sector.

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Table of Contents

Title Page .......................................................................................................................1

Final Paper Approval Form ...........................................................................................2

Acknowledgments..........................................................................................................3

Abstract ..........................................................................................................................4

Table of Contents ...........................................................................................................5

Chapter 1: Introduction ..................................................................................................6

Chapter 2: Literature Review .......................................................................................11

Chapter 3: Conclusions and Recommendations ..........................................................26

References ....................................................................................................................33

Annotated Bibliography ...............................................................................................36

Appendix I ...................................................................................................................46

Appendix II ..................................................................................................................53

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Chapter One

Introduction

Purpose

As custodians of the public trust, non-profit professionals are charged with

stewarding the resources of these organizations ethically and efficiently. Often, one of

the largest expenses of a non-profit organization is labour costs—the price of employing

people with the particular skills, knowledge and experience to advance the organization’s

mission. Knowing this, and that top salaries are made public record in Canada and the

USA, compensation for non-profit employees has become a matter of public dialogue.

The diversity of opinion on this topic is as varied as actual compensation rates

throughout North America. In 2010, the Association of Fundraising Professionals (AFP)

reported in its annual “Compensation and Benefits Survey” that “the top 25 percent of

respondent fundraisers earn more than $89,000, and the bottom 25 percent earn $50,000

or less” (2010). The survey cross-references operating budgets and sub-sector types with

compensation, which shows similar proportional variance between quartiles.

Given the growing popularity of this topic, the obligation of non-profits to

manage resources effectively and the proportional largeness of labour costs in non-profit

operating budgets, it is necessary to investigate this topic further. The purpose of this

research is to explore the available literature to reveal trends in perception and practice as

they relate to the compensation of non-profit professionals. The study will indentify gaps

in the body of knowledge that must be addressed to inform this important public dialogue

and enhance the administration of our non-profit organizations. Ultimately, the better

management of these organizations will improve their capacity to achieve their mission,

making improvements that benefit society as a whole.

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Research Question

To what degree does society support the mental model that Canadian and

American individuals employed in the non-profit sector ought to be compensated less

than those employed in the for-profit sector?

Background

In the last decade, news coverage scrutinizing compensation of non-profit

professionals in North America has steadily increased in frequency. Publications such as

Chronicle of Philanthropy, Forbes, New York Times, and Wall Street Journal, have all

circulated multiple stories on the subject, with titles such as: “A sharpened eye on charity

pay” (Chronicle of Philanthropy, 2009); “Pay at nonprofits gets a closer look” (Spector,

2009); and “Pay on steroids” (Novack, 2008) (see Appendix I for a sample article list).

This focus in the media is accompanied by the development of non-profit

organizations that now operate in the business of monitoring and evaluating registered

charities—compensation is a key focus of their work. Philanthropic Research Inc., better

known as GuideStar, is one such organization that began publishing its “Compensation

report” in 2001. A similar organization is Charity Navigator, which was formed in 2001

and publishes “top 10” lists and webinars on topics including compensation. Generally,

these organizations market themselves as watchdogs that monitor issues like

compensation that would otherwise go ‘unchecked’.

Concurrent to the development of this non-profit sub-sector, the industry as a

whole in Canada and the USA has faced several high-profile scandals involving

excessive compensation. For example, in 2009 Michael O’Mahoney, the former

president of the Hospital for Sick Children Foundation, received a $2.7 million severance

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package, prompting a robust public outcry of disapproval (Donovan, 2009). Similarly in

the USA, Gloria Pace King, the former CEO of the United Way of Central Carolinas, was

forced to resign in 2008 amid a dispute over her $1.2 million compensation package

(Frazier, 2008), inciting a similar response by media and members of the public.

However disappointing these incidents of excessive compensation may be, they

most assuredly are not common practice—top salary disclosure requirements can confirm

this. Though, the increasing frequency of media coverage, emergence of ‘watchdog’

organizations, and the vigorous pubic response to incidents of excessive compensation

illicit some questions: What value does society place on non-profit professionals? How

does it define what is excessive versus appropriate compensation? Is there a prevailing

mental model that supports the notion that non-profit professionals should be

compensated less than their counterparts in the for-profit sector?

Though the focus in the media has increased over the course of the last decade,

current perspectives of our modern non-profits and how they ought to operate may be

influenced by the history of their development in Canada and the USA. In the Christian

tradition of Europe during the colonization of North America, settlers established

churches, schools, hospitals and volunteer associations to care for the newly established

communities. These organizations were supported by a voluntary or subsistence-wage-

earning workforce. For example, Mary Lyon, who founded of Mount Holyoke College in

1837, wrote that the school hired teachers with “so much of a missionary spirit” that they

would happily accept “only a moderate salary” (Freidman, p. 61). Though the school

received donations and tuition, the prevailing perception was that an employee of a

community organization implicitly chose to earn less, as their service was partly

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philanthropic in nature. It is this implied ‘vow of poverty’, a mental model beginning in

early colonization, that this paper seeks to examine to determine if it still holds today.

Significance

This literature review is important, as it will provide an analysis of the research

available, and identify gaps in the body of knowledge as it relates to compensation for

non-profit professionals in the USA and Canada. Given the increasing frequency of

media coverage of this public dialogue and the importance of managing the resources of

our non-profit organizations as efficiently and ethically as possible, research must test

any mental model regarding compensation for non-profit professionals. This ought to be

done to ensure that society holds an informed and moral position. Coincidentally, this

position will directly affect the livelihood of current and future employees in this sector.

Moreover, this research is important to the non-profit sector aside from the

practical implications to compensation programs. The existence of a mental model that

supports lower compensation indicates society holds a view that the contribution of these

professionals is of less value than those in the for-profit sector in our capitalist economy.

Consequently, should this model truly exist, this research will identify what objective

information, if any, is present to support such a conclusion. Concisely, the information

presented in this study will speak to the perceived value society holds of the profession,

and assess the quality of information supporting this claim.

Definition of Terms

Mental Model: “Mental models are deeply held internal images of how the world works,

images that limit us to familiar ways of thinking and acting. Very often, we are not

consciously aware of our mental models or the effects they have on our behavior”

(Senge, 1990).

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Compensation: refers to the remuneration provided to an individual for services rendered

to an incorporated organization. This includes base salary, benefits and merit payments.

Donative-labour: the notion that one may accept less compensation with the intrinsic

understanding that the differential between total labour value and remuneration given is

equivalent to a philanthropic gift.

Nondistribution constraint: a unique limitation to non-profit organizations that restricts

the distribution of excess revenues as performance rewards to employees (in contrast to

for-profit organizations).

Private inurement: the act in which an employee receives compensation greater than what

is provided to the organization in return. Excessive compensation is an example of

private inurement.

Screening phenomena: a situation whereby non-profit employees are motivated less by

compensation, and more by producing quality product or service. The effect of this

phenomenon is lower compensation, which a signal to patrons (clients or donors) that the

organization uses resources in the most efficient way.

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Chapter Two

Literature Review

Introduction

A review of the related literature is best presented under the following headings:

1. Editorial perspectives of non-profit compensation

2. Anecdotal perspectives of non-profit compensation

3. Research-based analysis of non-profit compensation

Editorial perspectives of non-profit compensation

Perspectives of compensation for non-profit professionals are in no shortage of

supply. As top salaries are made public record in Canada and the USA on an annual

basis, debate and editorial commentary on this topic is revisited often. However, despite

the importance of public dialogue, not all contributions to the ongoing conversation are

grounded in comprehensive research. In fact, the vast majority of literature on the topic

of non-profit compensation is editorial, and nearly all of these pieces are based on

cursory-level data collection, rather than research. While interesting, and sometimes

sensational, the predominance of this type of commentary lends itself to a public

conversation that may be dangerously under-informed and demonstrably polarized.

One of the traditional contributors of data that informs this ongoing public

dialogue is the compensation survey. One of the most longstanding forms of this cursory

research is the survey administered to members of the Association of Fundraising

Professionals (McManus, 2011). Now in its eleventh year, this survey is the most detailed

of the studies of this kind for the non-profit sector conducted in North America. This is

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attributed to the fact that AFP members voluntarily disclose their complete compensation

information (2,872 respondents in 2011), which in most cases is not otherwise accessible.

Other cursory-level research is conducted annually by businesses such as:

Bluewater Nonprofit Solution’s “Nonprofit organizations benefits report” (2010) and

Abbot, Langer & Associates’ “Compensation in nonprofit organizations” (2006).

Philanthropic Research, Inc. also publishes the “GuideStar non-profit compensation

report” (2009). These three studies are analyses of annual charity filings: the 990 form

(the ‘Return of Organization Exempt From Income Tax’) is filed by American non-

profits in the USA with the Internal Revenue Service; and the T3010 form (the

‘Registered Charity Information Return’) is filed by Canadian non-profits with the

Canada Revenue Agency. Both of these forms are limited in terms of information

collected, which provides an incomplete picture of a non-profit organization’s

compensation program. For example, the 990 form only requires individual salaries to be

disclosed if they exceed $150,000. Likewise, in Canada, the T3010 form only requires

one to report the number of individuals compensated on a table of salary ranges for the

top ten wage-earners (each range varies by $49,999).

Although the collection and summary of this data is important, there are

significant shortcomings in the methodology and conclusions drawn. For example,

although the AFP’s annual survey is by far the most detailed, its population sample is

limited to only AFP members—that is to say, only fundraisers. This may bias the

information collected if one were to draw industry-wide conclusions from the data

summary, as it may be the case that only higher paid non-profit employees can afford the

membership dues to be a part of the association, thereby skewing the data upwards to

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reflect higher average salaries. As a result of the limited applications of this cursory-

level research, the level at which the ongoing public dialogue draws from these studies

must be taken into consideration to determine if it is truly reflective of the non-profit

sector as a whole, or largely the opinion of the author.

The majority of editorial articles in North America in the last decade have been

contributed to by only a few key publications: Chronicle of Philanthropy and its sister

newspaper, Chronicle of Higher Education; Forbes; New York Times; and Wall Street

Journal (see Appendix I for a sample list of articles). Of the contributions from the

publications identified in this research, the mainstream media outlets (namely, Forbes,

New York Times and Wall Street Journal) published articles that are nearly always

disapproving of non-profit compensation practices. The non-profit sector publications

(Chronicle of Philanthropy and Chronicle of Higher Education) have been largely

neutral, but mixed on the whole: disapproving in some specific cases (E.g. excessive

compensation scandals); and summarizing aforementioned survey findings in other cases.

Within this polarized editorial dialogue, the largest and most frequently published

subtopic is compensation for non-profit executives. This is likely a product of a few

contributing factors: one, these individuals are typically the highest wage-earners and

thus represent the zenith of compensation throughout the sector; two, top salaries are

publically disclosed on the Form 990 and T3010 in the USA and Canada (respectively),

providing specific points of reference; and three, recent scandals of excessive

compensation such as those referenced previously provide an unfortunately sensational

issue for media newsgroups to publicize.

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On the subject of executive compensation, there are two sub-sectors of the non-

profit industry that have received considerably more public attention on the topic;

hospital and higher education (college and university) executives. This may be a focus

for two reasons: one, on average, these sub-sectors have higher wages than most other

sub-sector organizations in the USA and Canada (McManus, 2011, pp. 19, 23); and two,

despite the relatively small percentage these sub-sectors represent of total non-profit

organizations (2.7% in the USA in 2011), they account for the largest share of revenue

(60.9% or $851.1 billion in the USA in 2011) (Roeger, 2011, p. 4).

Despite the focus on these particular sub-sectors, authors such as Gibelman

(2001) acknowledge the increased, disapproving media coverage of executive

compensation in non-profit as a whole. She goes further to state that this discussion does

not include perceptions of what is reasonable compensation and with what criteria one

can measure reasonableness (p. 60). She argues that there are four key (false)

assumptions in society that are reflected in the editorial coverage: “nonprofits are mission

driven…altruistic missions suggest a level of sacrifice on the part of the volunteer and

paid labor force; nonprofit work requires fewer qualifications and skills than work in the

for-profit sector; …those who work with the poor should get poor wages; [and]

nonprofits are not real businesses” (p. 62).

Though Gibelman refutes these assumptions, little is done to prove that these are

accurate reflections of society, nor to prove with well-supported evidence that they are

not actually the case in reality. Though the author clearly demonstrates a bias, and

presents little supplementary research on this topic aside from additional editorial articles,

anecdotes and information drawn from compensations surveys, she does make a good

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point: there seems to be no discussion in the media of what constitutes reasonable

compensation, only disapproval of current practices.

Herein lies the greatest deficiency in both sides of this opinion-based public

debate; a clear lack of supplementary research that extends beyond a summary of limited

survey data. Moreover, the information drawn upon from these surveys and annual

charity filings are reflective of current compensation practices, which cannot necessarily

be interpreted as the manifestation of the optimal or most equitable scheme.

Understanding this, the polarized debate on current compensation practices leads to the

question: With what information was current non-profit compensation programs formed?

Understanding this context will provide greater insight into current perspectives and

practices.

Anecdotal perspectives of non-profit compensation

Seminal compensation program guidelines have been the historically longest-

standing literature on this topic. The focus of these publications is the practical

application of compensation conventions in the sector (see Appendix II for a sample list

of publications). Though in many cases authors of these works are experienced and have

led successful organizations or consultant practices, for the most part their works are not

based on original research. Hallock (2002) supports this claim, noting that there is almost

no empirical study on the topic (p. 377). The danger in accepting these anecdotes as

conventions is that these may change to not actually reflect the best option for a

compensation programs that could be developed with comprehensive research. For

example, from the works listed in Appendix II, one can see that some date back to the

1980s, including Silberman (1986), who argues just as the title of this work suggests:

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“Not-for-profit organizations need incentive compensation”. Unfortunately, Silberman’s

work is not based on research, and, though his belief may have been supported by others

at the time, his conclusions are based solely on opinion.

Twenty-two years later and in contrast to Silberman, the former CEO of the AFP,

Paulette Maehara, in a chapter of Ethical Fundraising (2008) published the presently

widely-accepted convention among AFP members and codes of ethics throughout the

non-profit sector that incentive-based compensation for fundraisers is unethical, and

ought not to be used by any member in accordance with the AFP Code of Conduct.

Instead, Maehara offers a practical guide to construct a compensation system that is based

on organization goals and performance metrics other than amount of funds raised.

In comparison, Silberman and Maehara both offer technical advice on

constructing a pay and benefits system for non-profit employees, and both base their

models on convention and in-field experience. However, the question follows: Who is

right? By comparing these cases, one can see the problem with accepting this type of

advice without research. Conventions can change, be subject to bias, and directly oppose

one another at any given time. Though these practical manuals have played an important

role, in order to solve the evolving challenges facing the industry at present, research is

necessary to evaluate anecdotes and prescribe new program alternatives if necessary.

Understanding that compensation programs have been based on anecdotes and

conventions derived from non-profit professionals lends some credibility to those that

have been critical of current compensation practices. Knowing that the most prevalent

public information is current salary figures for some of the highest paid in the sector, and

that these salaries were influenced by practices determined by non-profit professionals,

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makes it seem comprehensible that society may question the validity of these practices.

However, despite the development of the compensation system in the non-profit sector,

some forward-thinking researchers are making progress in assessing the appropriateness

of this system through comparative analysis with the for-profit sector.

Research-based analysis of non-profit compensation

The chief barrier to comparative analysis of non-profit versus for-profit

compensation programs is the fundamental dissimilarity of the two sectors. In order to

draw conclusions from such disparately purposed organization types, a meaningful level

of similarity must be defined between the two. Hopkins (2007) is one such author who

attempts to define factors to evaluate compensation for an employee in a non-profit

organization. His primary factor for comparison is compensation by similar

organizations, in both sectors, for a comparable position type in the same

geographic region or community (p. 571). Along with eight other factors, including

organization size, previous compensation and job performance, Hopkins articulates a

framework that non-profits can use while collaborating regionally to assess their

compensation practices.

While the current application of this framework may result simply to be more

compensation surveys (though regionally focused versus national or international in

scope), Hopkins highlights a valuable basis for comparison; the fraction of organizations

in for-profit and non-profit with similar mandates, and/or individuals with similar job

functions in a specific region. In this vein, there are two key functions found both in for-

profit and non-profit that are the subject of more comprehensive, comparative research:

executive or management professionals and hospital administrators.

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By far, the most published topic of comparative analysis has been that of

executives of for-profit and non-profit organizations. Again, this is partly due to the

disclosure requirements of executive compensation levels in Canada and the USA along

with the relative popularity of this topic in public dialogue. However, this research is

fundamentally based on the similarity in job function for these individuals. As managers

of staff, authors of strategic plans, budgets, etc., some researchers have deemed these

individuals to have enough commonality in job function to attempt to measure

differences in compensation practices.

Oster (1998) is another researcher that draws a series of interesting conclusions on

this sub-topic. In her comparison of for-profit and non-profit executives she identifies

that “given the greater labor intensity of the non-profit sector, it might well be argued that

the role of top management is accentuated” (p. 208). She examines non-profit sub-

sectors (hospital, higher education, foundation, and social service institutions) to find that

organization size is as positively correlated with executive compensation as it is in the

for-profit sector. However, Oster notes there are limits compensation programs that exist

only in the non-profit sector, such as Board and donor perspectives that limit

performance-based increases that are more commonplace in for-profit. She also claims a

religious affiliation or if an executive is female there are, unfortunately, further

reductions in compensation levels for non-profit professionals. Further research is

necessary to determine the causal relationship behind these findings.

Frumkin (2001a) also suggests executives of both sectors can be compared by

organizational size, and adds that performance of management and availability of free

cash flows (financial health) can be used for comparison. The measurement of the latter

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would be particular to each organization based upon preset performance indicators. He

too notes there are unique limitations to compensation for non-profits, as they do not

distribute excess revenues as performance rewards to executives whereas a for-profit can;

non-profit executives are evaluated upon mission fulfillment, not revenue realized, which

is often a far more challenging outcome to measure (p. 4). This principle is known as the

“nondistribution constraint”, coined by Hansmann (1980, 1996), which is common to all

non-profit organizations in the USA and Canada.

Hallock (2002) confirms a positive correlation between organization size and

executive compensation exists. He goes further than Frumkin and Oster to determine

measures of ‘size’ more clearly as “market value, assets and number of employees” (p.

392). This is important, as number individuals employed does not necessarily capture the

value generated by the organization on its own. Hallock adds in his study that

expenditure on program delivery, fundraising and management are key measures of

organizational size when comparing non-profit organizations, though these measures

cannot be applied for inter-sector comparison. He notes that comparing managers of for-

profit and non-profit organizations seems like an obvious approach, as both are “visible,

and clearly focal people in their organization” (p. 378), and the scrutiny observed by non-

profit boards is similar to that of directors of for-profit firms. However, despite

identifying these key indicators and similarities, his research focuses almost exclusively

on comparing non-profit compensation for executives with other non-profits through a

variety of measures, including industry sector and the receipt of government grant money

in the USA (organizations that receive grants on average pay substantially higher wages

to managers) (p. 401). His inter-sector comparative findings are limited, but do conclude

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that the average non-profit executive is compensated much less than one in the for-profit

sector in a similarly sized organization (p. 404).

Like Hallock, Preyra (2001), also compares executives in non-profit

organizations, and notes the limitations to compensation that are the result of having non-

profit boards along with the nondistribution constraint (pp. 509 – 510). However, Preyra

focuses his study narrowly to compare Hospital CEOs in Ontario, Canada. His study

measures compensation in two forms: salary and cash bonuses; and options, restricted

shares, payouts and other non cash compensation (p. 516). Preyra claims that the latter

forms of compensation in for-profit hospital settings actually shift the focus of

management to increasing share price versus other less measureable, but important tasks.

His findings upon comparing this very specifically-defined data set are that CEOs of for-

profit corporations earn roughly twice that of their non-profit counterparts in similarly

sized organizations (p. 509). Reiter (2009) acknowledges the same finding in her

examination of hospital executives in Ontario, and notes that although financial

performance of hospitals has declined, compensation for non-profit CEOs has increased,

demonstrating that these performance indicators are not tied to remuneration for

Ontario’s non-profit hospital CEOs as they are for their for-profit counterparts (p. 725).

Spitzer (2005) also discusses the role of compensation for non-profit hospitals in

his comparative study, but with a particular focus on the variation of compensation for

non-profit hospital CEOs broadly in the USA. He claims that there are some cases of

overcompensation and undercompensation, with the latter being more commonplace for

non-profit hospital executives (p. 67). Spitzer references the new information age as a

phenomenon that presently allows patients, donors and public to quickly access

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compensation information and choose to support or use the services of hospitals that they

deem most equitable. It is this ‘free flow’ of capitalist market adjustments in response of

consumer (donor and patient) demand that Spitzer claims will invariably signal

adjustments to compensation practices (p. 68). Though creative, his application of

Keynesian economics to non-profit hospital compensation programs is simplistic and

unsupported with data. However, his observations of undercompensation are in line with

the conclusions drawn by these other comparative researchers focusing on this sub-sector.

Where the well-supported analysis of Hallock and Preyra of hospital executive

compensation narrowly focuses on a singular Canadian province, and the overly-

prescriptive, less-supported America-wide conclusions of Spitzer both have their

limitations, Roomkin (1999) is able to strike a balance. Drawing from information on

hospitals across the USA, he controls for variances in the requirements for specialized

knowledge, problem solving and accountability for executives in for-profit and non-profit

hospitals using an evaluation scheme created by Hay Consultants (an American

consulting firm that specializes in non-profit compensation research) (p. 757). Roomkin

finds that the job responsibilities are comparable for both sectors, and that total

compensation is lesser for non-profit executives (p. 779). In addition, just as Hallock and

Preyra found in Ontario, Roomkin notes key differences in pay structures between

sectors. In non-profit settings, he found that hospital CEOs received higher base salaries,

whereas in for-profit variable pay was far more significant.

Ballou (2003) also arrived at similar results in his comparative study of American

hospitals four years later. He was able to segregate religious and secular non-profit with

for-profit hospitals to determine “the expected difference in CEO base salary between

22

for-profits and the aggregate of all other types is roughly $13,700 per year” (p. 1915).

However, Ballou also found that variable pay was more significant for for-profit hospital

CEOs, resulting in higher total compensation for these executives. These conclusions all

support the nondistribution constraint theory for non-profit organizations as non-profit

hospitals cannot disburse excess revenues to executive due to private inurement laws.

Each of the comparative studies reviewed here have added rigor to the

information made available to the ongoing public debate of compensation for non-profit

professionals through the thoughtful scientific review of limited availability of data.

While controlling for multiple variables including geography, industry sub-sector,

organization size, responsibility, position, gender and religious affiliation, these

comparative analyses challenge many of the editorial opinion-based publications

referenced in Appendix I that are critical of non-profit compensation practices. Indeed,

Leete (2001) goes as far as to reexamine previous comparative analyses preformed using

an in-depth statistical assessment and adjusting for misclassified sub-sector data to verify

results. She confirms that a wage differential persists despite some errors in previous

data (p. 163). To this end, the inter-sector research demonstrates a verifiable negative

correlation between compensation levels and employment in the non-profit sector that

cannot be confused for causation. Concisely, though these studies demonstrate non-profit

professionals are compensated less, they do not explicitly determine why this is so.

Ruhm (2003) also demonstrated the disparity in compensation levels between

sectors, stating “the wages of nonprofit employees average 11 percent less than those of

their counterparts with similar observed attributes” (p. 993). His comparison also

controlled for sub-sector type and role, focusing on ten categories: “clergy/religion,

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health professionals, social work, health technicians, health services, educators/librarians,

secretaries, other administrative support, managers, and non-health services” (p. 1006).

However, Ruhm also goes further to put forward theories of causation. One such

explanation was the idea that non-profit employment requires less hours a week, so when

accounting for true compensation as a function of hours worked, the difference is reduced

from 11 to six percent (p. 1011). Another of his hypotheses for the wage differential was

that most non-profit jobs are concentrated in industries that receive lower compensation

in comparison to others (p. 1017). This however, is not consistent with the findings of

the aforementioned researchers who focused specifically on comparing executives and

hospital professionals. In brief, neither theory was supported by conclusive research.

Another such explanation for lower compensation in non-profits is from

Hansmann (1980) in the same study in which he outlines the nondistribution constraint of

non-profits. In this article, he articulates a scenario he calls the “screening phenomena”

in which a non-profit employee is motivated less by compensation, and more by

producing quality product or service (pp. 876, 899-901). In this case, an organization

would select only those who are motivated in this way and not so by higher levels of

compensation. The effect of this phenomenon is lower compensation at these selective

organizations, and a signal to patrons (client or donor) that funds given to the

organization will be used in the most efficient way, as demonstrated by the employees’

primary commitment to the organization’s product or service over their own

remuneration. Though Hansmann has become well known for his thoughts on the

compensation differential, the “screening phenomena” remains untested, providing no

evidence to indicate there are individuals or organizations that subscribe to this principle.

24

Hansmann’s phenomenon is a variation of the more commonly referenced

donative-labour theory of non-profit compensation (Hallock, p 382). In this model first

articulated by Preston (1989), “the nonprofit labor market suggests that workers supply

labor to non-profit organizations at lower than market wages in return for the opportunity

to provide goods with positive social externalities” (p. 438). Concisely, non-profit

professionals accept lower wages because they view the differential to be an indirect

donation with tangible value. This concept is echoed by multiple authors since Preston

who attempt to explain the inter-sector compensation differential (Rose-Ackerman 1996,

Frank 1996, Frumkin 2001b). According to Rose-Ackerman, a non-profit organization is

a workplace that an ideologue would more naturally be inclined to be employed (p. 719-

720). She claims the opportunity to see an ideology fulfilled is incentive to accept lower

compensation. However, Rose-Ackerman, like Hansmann and Preston, does not

substantiate this theory with the research that would demonstrate causation of the

compensation inequity between sectors.

Despite the clear lack of research supporting these positions, the hypothesis

persists that in order for non-profit employees to continue to work for lower

compensation than their for-profit equivalents, they must either receive some other

intangible benefits or be intrinsically motivated by something unique to the non-profit

sector other than traditional compensation programs (E.g. money, benefits, options, etc.).

Whereas Hansmann, Preston, Rose-Ackerman and others have attempted to define this

missing benefit, others have attempted to demonstrate its existences by measuring total

utility received.

25

Benz (2005) affirms this conclusion: “The studies suffer from the problem that

theoretical predictions over wage differentials in the non-profit sector are ambiguous” (p.

156). For what he claims to be the first time, Benz compares job satisfaction measures in

the for-profit and non-profit sectors to demonstrate the principle that “substantial non-

pecuniary work benefits” exist for non-profit professionals (p. 157). Though his study

does not offer an explanation of what this benefit might be, unlike those referenced

above, he does equate additional job satisfaction to an additional benefit for those

employed in non-profit. By analyzing large data sets from the United Kingdom (UK)

and the USA, while controlling for industry sub-sector, Benz empirically identifies a

slight increase in job satisfaction for non-profit professionals; marginally in the USA, but

slightly more significant in the UK in the 1990s (p. 170). He also compares offerings of

‘fringe benefits’ in the ‘professional and related services’ sub-sector, such as health,

dental and life insurance, maternity leave, employer-provided pension plans, training and

child care, to find that these offerings are more frequent in non-profit organizations (p.

171). Interestingly, although the provision of these benefits is more common for non-

profit employees, they do not account for the increase in job satisfaction. In fact, these

particular benefits are not found to be systemically influencers of job satisfaction. Benz

concludes his study by acknowledging the limitations of his research, noting that

additional work must be done to determine the causation of this marginal increase in job

satisfaction and how it may relate to the differential in compensation between the non-

profit and for-profit sectors.

26

Chapter Three

Conclusions and Recommendations

Introduction

Public dialogue on the subject of compensation for non-profit professionals has

increased dramatically over the course of the past decade, which highlights the need for

additional research-based exploration. The importance of this conversation is punctuated

by the fundamental principle that these individuals play a critical role in stewarding the

institutions that collectively form the public trust. As such, and given the proportionally

significant expense of labour, non-profit organizations must be diligent to determine the

most efficient and accountable use of these limited resources.

Three key factors have contributed to the marked increase in dialogue on this

subject. The first is the incidence of public scandals of overtly excessive compensation;

unfortunately often involving top executives of large, well-known non-profit

organizations. These events act to both galvanize and polarize the debate with

sensational public media coverage, often eliciting a strongly negative public reaction.

The second factor is expanded disclosure requirements for total compensation of highest

paid professionals in both the USA and Canada. These requirements make earnings a

matter of easily accessible public record. Finally, the third is the relative ease of

accessibility to this information and the rise of “watchdog” organizations that publish

summary and evaluative reports on the subject.

The culmination of these factors, leading to the proliferation of debate on this

subject, motivated this study to seek out gaps in the existing body of knowledge. These

gaps ought to be addressed in order to further inform this important public dialogue and

enhance the administration of our non-profit organizations.

27

Conclusions

The data that informs the ongoing conversation regarding non-profit

compensation is limited to two types: one, publically disclosed information on top paid

professionals by organization; and two, surveys administered by associations or networks

of non-profit organizations. Though these data sets are easily accessed, they are limited

in scope, focusing either on top wage-earners or specialized job functions such as

fundraising professionals in the case of the Association of Fundraising Professionals’

compensation and benefits study.

Though the data available on this subject may have its limitations, the

implications that have been drawn from it are far-reaching, though many are not always

derived from well-tested research. The range of conclusions addressing compensation for

non-profit organizations found in the publications reviewed in this study can be

categorized into three distinct groups: one, editorial-based opinion pieces; two, anecdotal

perspectives; and three, research-based analysis.

Editorial perspectives are the most frequent and demonstrably polarized. Well-

recognized and respected news publications such as Forbes, New York Times and Wall

Street Journal have all produced multiple opinion pieces that are largely critical of

current non-profit compensation practices. This supports the notion that society holds a

mental model that Canadian and American individuals employed in the non-profit sector

ought to be compensated less than those employed in the for-profit sector.

The need for more comprehensive research is underscored by the fact that the

Chronicle of Philanthropy and Chronicle of Higher Education, two well-respected non-

profit sector publications, have also drawn upon the same cursory data to form

28

conclusions that are typically neutral on the whole. The fact that these articles are the

most common publications, and that very different conclusions can be drawn from the

same information suggests that additional research is necessary to truly advance the

public dialogue.

Perhaps the longest-standing type of literature on the subject of non-profit

compensation has been anecdotes from seasoned professionals in the field. Though often

their contributions to the success of non-profit organizations in the USA and Canada have

been pronounced, these authors provide prescriptions based on their experience and well-

intended thinking that at times is directly in contrast with one another. Furthermore, as

non-profit organizations are public entities, accountability is ultimately owed to Canadian

and American citizens. Though non-profit professionals may seek guidance from other

experienced peers within the sector, protracted public debate on such a key part of non-

profit business demonstrates the need for this sector to gather and disseminate

information that truly informs these citizens in their discussion, rather that dictate what

the non-profit sector determines is best practice for itself.

The least common type of publication on this subject is comprehensive research.

Of these articles published, many have focused on key roles within non-profit

organizations, reflecting the availability of data collected and similarities between

sectors. Mainly, studies have centered on executives and hospital administrators for

comparative analysis, as these roles both exist in for-profit and non-profit settings. In

every article indentified in this study, total compensation for positions with comparable

function and responsibility demonstrated lower compensation for non-profit

29

professionals. Some articles also controlled for geographic region and differences of

base salary and variable pay, yielding the same overall results.

Many of these comparative studies also demonstrate a correlation between

compensation paid to non-profit professionals and organization size or industry sub-

sector. Some authors have even gone further to suggest that factors such as if an

employee is female or the organization has a religious affiliation that there is a negative

correlation to compensation. These facts, rooted in comprehensive comparative analysis,

in conjunction with the largely negative editorial published by organizations outside the

non-profit sector supports the notion that society does indeed hold a mental model that

non-profit professionals ought to be compensated less than their for-profit counterparts.

Some authors of these comparative studies have offered theories to explain the

differential, which can be grouped into two categories: one, the intrinsic motivations of

the individual; and two, the operating environment of non-profit organizations.

Concisely, causation has been related to the character of non-profit professionals or the

environment in which they operate.

When considering the individual, some authors have postulated that the

opportunity to see an ideology fulfilled takes precedence over compensation and offers a

reward with superlative value to the employee. An additional explanation, the donative-

labour hypothesis, claims that one accepts lower wages with the understanding that the

differential in compensation is equitable to a donation to the organization; therefore

rooted in a philanthropic spirit. Another suggests that a non-profit employee will accept

less in compensation to signal to the donor and client that the organization operates as

effectively as possible, and is therefore worthy of their patronage.

30

Conversely, but perhaps not mutually-exclusive, some have suggested that a non-

profit professional receives other benefits from the environment in which they work,

which accounts for the compensation differential between sectors. One author claims

that less hours of work and less stress in a non-profit environment accounts for lower

remuneration, though this is not substantiated. Still another attempts to measure utility

gained as a function of total compensation and job satisfaction, though does not articulate

or support with research exactly what fringe benefits would cause such increased

satisfaction. In short, these theories are as unsubstantiated as those proposing inherently

intrinsic motivation to explain the compensation differential.

Despite the lack of support for theories of causation, comparative research has

demonstrated that non-profit professionals are in fact compensated less than their for-

profit counterparts. This reality, in conjunction with the expansive and critical editorial

published by authors external to the non-profit sector supports the notion that society

does hold the mental model that Canadian and American individuals employed in the

non-profit sector ought to be compensated less than those in the for-profit sector.

Recommendations for Further Study

Noting that the balance of literature on the subject of non-profit compensation is

largely editorial, anecdotal or based on limited survey-level data, the opportunities for

further research are abundant. Primarily, gathering additional data on compensation

practices beyond top wage-earners and specific job functions (E.g. fund development

staff) will allow for more complete analysis and comparison to for-profit environments.

Indeed, as public institutions, non-profit organizations in the USA and Canada are well

positioned to provide such a level of transparency of their compensation practices.

31

With this level of transparency, researchers will have access to complete data sets

to analyze contemporary compensation. These arrays will inform the debate of current

practices, but will not capture historical trends on their own. Given the volunteer or

subsistence-wage-earning roots of the modern non-profit organization in the USA and

Canada during colonization, additional research into previous practices could provide

context into current trends. Additional research into history and organizational

development as it relates to compensation is key to understanding current realities.

In addition, inter-sector comparative analysis is only possible where all other

variables are controlled, including job function and responsibility. Since there are

positions within the non-profit sector that are mostly unique, such as that of the fund

development professional, analysis is needed to establish a base-line level of similarity

with an equivalent role in for-profit to complete a comprehensive comparison for the

entire non-profit organization. This may be possible by defining skills and experience

required for these unique positions in order to demonstrate statistically similar roles in

for-profit organizations.

Finally, one of the best ways to determine if a mental model holds true is to

conduct opinion surveys on the subject. This is one of the only methods to determine if

such a belief is indeed widely held. Despite the plethora of critical editorial, and

evidence demonstrating the differential in compensation exists, these facts alone do not

prove a mental model truly persists. Surveying both members of the public and non-

profit professionals to determine if there are consistent trends in perspective would

provide essential context to existing data analysis. These facts, in conjunction with

public opinion surveys would truly demonstrate if such a social construct exists.

32

Summary

The health of non-profit organizations in the USA and Canada is dependant on

those who develop and manage them. As stewards of the public trust, these professionals

are mandated to allocate resources as efficiently and morally as possible, including

expenditures for compensation. Given the escalation of the public debate on this subject

and the importance of retaining and attracting talented employees, this issue requires

comprehensive research and comparative analysis.

Though additional research is needed to supplement limited data, current statistics

demonstrate a correlation between employment in the non-profit sector and lower

compensation than equivalent roles in the for-profit sector. This truth, and the

proliferation of publications criticizing non-profit compensation practices supports the

notion that society holds a mental model that Canadian and American individuals

employed in the non-profit sector ought to be compensated less than those employed in

the for-profit sector. Concisely, professionals that choose to work in the non-profit sector

ought to do so with the understanding that they are meant to be compensated less—an

implicit vow of poverty.

33

References

A sharpened eye on charity pay (2009). Chronicle of Philanthropy, 22(4), 10.

Baldwin, W. (2004, September 6). Your charity dollars at work. Forbes.

Benz, M. (2005). Not for the profit, but for the satisfaction? Evidence on worker well-

being in non-profit firms. Kyklos, 58(2), 155-176.

Donovan, K. (2009, October 1). Sick kids charity boss gets $2.7M send-off. Toronto Star.

Frazier, E & Hall, K. (2008). United way's challenge: Rebuilding a region's trust. The

Charlotte Observer.

Frank, R. H. (1996). What Price the High Moral Ground? Southern Economic Journal,

63(1), 1–17.

Friedman, L. J., & McGarvie, M. D. (2003). Charity, philanthropy, and civility in

American history. Cambridge, UK: Cambridge University Press.

Frumkin, P. (2001a). Are nonprofit CEOs overpaid? Public Interest, (142), 83.

Frumkin, P. & Keating, E. K., (2001b). The price of doing good: Executive compensation

in nonprofit organizations. Cambridge: Hauser Center for Nonprofit

Organizations, Harvard University.

Gibelman, M. (2000). What's all the fuss about? Executive salaries in the nonprofit

sector. Administration in Social Work, 24(4), 59-74.

Hallock, K. F. (2002). Managerial Pay and Governance in American Nonprofits.

Industrial Relations: A Journal of Economy & Society. 41(3), 377–406.

Hansmann, H. B. (1980). The Role of Nonprofit Enterprise. Yale Law Journal, 89(April),

835-898.

34

Hansmann, H. B. (1996). The Ownership of Enterprise. Boston: Harvard University

Press.

McManus, A., Martin, G., Watt, A. & Williams, C. (2011). 2011 compensation and

benefits study: US and Canada. Arlington, VA: Association of Fundraising

Professionals.

Hopkins, B. R. (2007). The Law of Tax-Exempt Organizations (9th

ed.). Hoboken, NJ:

John Wiley & Sons.

Leete, L. (2001). Whither the Nonprofit Wage Differential? Estimates from the 1990

Census. Journal of Labor Economics. 19(1), 136–169.

Novack, J. & Barrett, W. P. (2008). Pay on steroids. Forbes, 181(10), 28.

Oster, S. (1998). Executive Compensation in the Nonprofit Sector. Nonprofit

Management and Leadership, 8(3), 207–221.

Philanthropic Research, Inc. (2011). 2011 GuideStar nonprofit compensation report (11th

ed.). Williamsburg, VA: Philanthropic Research.

Preyra, C., & Pink, G. (2001). Balancing incentives in the compensation contracts of

nonprofit hospital CEOs. Journal of Health Economics, 20(4), 509-525.

Reiter, K. L., Sandoval, G. A., Brown, A. D., & Pink, G. H. (2009). CEO compensation

and hospital financial performance. Medical Care Research & Review, 66(6),

725-738.

Roeger, K.L., Blackwood, A. & Pettijohn, S.L. (2011). The nonprofit sector in brief:

public charities, giving and volunteering, 2011. Washington, DC: Urban Institute.

35

Roomkin, M.J. & Weisbrod, B.A. (1999). Managerial compensation and incentives in

for-profit and nonprofit hospitals. Journal of law, economics & organization,

15(3), 750-781.

Rose-Ackerman, S. (1996). Altruism, Nonprofits and Economic Theory. Journal of

Economic Literature,34(4), 701-728.

Ruhm, C.J. & Borkoski, C. (2003). Compensation in the Nonprofit Sector. Journal of

Human Resources, 28(4), 992–1021.

Senge, P. (1990). The Fifth Discipline: The Art and Practice of the Learning

Organization. New York: Doubleday, 8.

Silberman, S. J., & Crystal, G. S. (1986). Not-for-profit organizations need incentive

compensation. Personnel, 63(4).

Spector, M. & Banjo, S. (2009). Pay at nonprofits gets a closer look. Wall Street Journal

- Eastern Edition, 253(71), A9.

Spitzer, A. L. (2005). Executive compensation in nonprofit health care organizations:

Who’s in charge? Health Matrix: Journal of Law Medicine, 15(1), 67-82.

36

Annotated Bibliography

A sharpened eye on charity pay (2009). Chronicle of Philanthropy, 22(4), 10.

This article provides an example of the type of critical publications that arouse

following a series of public scandals of excessive compensation. The new focus of this

trend was payment for services of managers and trustees.

The Chronicle of Philanthropy is a twenty-year-old information hub for donors,

non-profit professionals and organizations. It is published 18 times annually, both online

and in print, and read by over 110,000 subscribers.

Based in Washington, D.C., this and is considered one of the main sources of

information for fundraising professionals in Canada and the USA. The material

published is typically limited to that geographic region.

Baldwin, W. (2004, September 6). Your charity dollars at work. Forbes.

William Baldwin has been an editor for Forbes for the last 13 years. He primarily

contributes to articles of financial investment and for-profit business and is considered to

be an industry expert. He graduated from Harvard in 1973 with a degree in linguistics

and applied math.

Forbes is a highly recognized business publication that focuses mainly on for-

profit organizations and financial planning for individuals. Its publications specifically

focus on the USA, Europe and Asia.

This particular article is exceptionally critical of non-profit organizations, calling

for increased transparency, removal of corporate tax exemption and re-examination of

compensation practices. It is unsupported by research and depends entirely on limited

examples and the anecdotes of the author.

Benz, M. (2005). Not for the profit, but for the satisfaction? Evidence on worker well-

being in non-profit firms. Kyklos, 58(2), 155-176.

Matthias Benz is an economics correspondent for Germany. He graduated from

the University of Zurich, Switzerland with a Masters Degree in History, Economics and

Media Science and later with a Ph.D. in Economics. At the time this article was

published, Benz was a visiting Research Fellow at the Boalt School of Law, University of

California at Berkeley. Upon leaving this position he was a Senior Assistant, Institute for

Empirical Research in Economics for his alma mater, the University of Zurich. Benz is

considered to have expertise in economics research.

Kyklos is an international peer-reviewed journal on economics and social sciences

with over 60 years of history. It publishes articles with contemporary applications for

economic policy and business practices. This journal is well-respected with high

standards for academic, research-based writing.

Donovan, K. (2009, October 1). Sick kids charity boss gets $2.7M send-off. Toronto Star.

37

This article provides a good example of the sort of critical, opinion-based pieces

that sensationalize the subject of non-profit compensation. Though the article is careful

to not extrapolate sweeping prescriptions for the non-profit sector, it does dramatize the

single incidence of excessive compensation. In addition, this particular piece is subject to

legal complaint by Michael O'Mahoney.

The Toronto Star is a 120 year old publication that has the largest readership of

any of the kind in Canada. Published daily, this newspaper is considered to be a reliable

source for publishing current events and trends. Kevin Donovan is the Investigative

Editor and a senior reporter at the Toronto Star.

Frazier, E & Hall, K. (2008). United way's challenge: Rebuilding a region's trust. The

Charlotte Observer.

This article is another example of sensationalized coverage of a single incident of

excessive compensation. It too is careful to not draw larger conclusions for the sector,

given its focus on the referenced scandal.

Kerry Hall and Eric Frazier are both reporters at The Charlotte Observer,

specializing in business development and social media, respectively. Neither author has

built a reputation for expertise in the non-profit sector and related issues.

The Charlotte Observer is over 126 years old, with a specific focus on the North

Carolina region, where the particular compensation scandal referenced had taken place.

Frank, R. H. (1996). What Price the High Moral Ground? Southern Economic Journal,

63(1), 1–17.

Robert Frank is considered to be an expert in economics. He is the H.J. Louis

Professor of Management and Professor of Economics, Johnson Graduate School at

Cornell University in New York. He has degrees in Mathematics (B.S., Georgia Tech),

Statistics (M.A., University of California at Berkeley) and Economics (Ph.D., also

Berkeley). As a result his work on this subject, Frank was invited as a Distinguished

Guest Lecturer at the 1995 annual meetings of the Southern Economic Association.

The Southern Economic Journal is a publication of the aforementioned

association that dates back to 1893, making it the eighth oldest academic journal on

economics in the USA. This publication is well-respected, with high standards for

research and publishing.

Friedman, L. J., & McGarvie, M. D. (2003). Charity, philanthropy, and civility in

American history. Cambridge, UK: Cambridge University Press.

Lawrence Friedman retired from years of tenured professorship including 13 years

at Indiana University in 2006. He specialized in American History and the History of

Philanthropy. He received his Ph.D. from the University of California at Los Angeles

1967. Friedman is considered to be an expert on the subject of the history and

institutionalization of philanthropy.

Mark McGarvie is a current professor of history and leadership studies at the

University of Richmond in Virginia; a position he has held since 2003. He earned a

38

Ph.D. in history from Indiana University in 2000 and a J.D. from Marquette University

Law School in 1981. He has held various teaching positions in the USA, and is

considered to be a subject mater expert in history and corporate law.

These authors join forces in this publication, offering well-researched and

supported documentation of the historical evolution of the non-profit sector in the USA

and Canada.

Frumkin, P. (2001a). Are nonprofit CEOs overpaid? Public Interest, (142), 83.

Peter Frumkin is an Associate Professor of Public Policy at Harvard University in

the Kennedy School of Government, which is affiliated with the Hauser Center for

Nonprofit Organizations. Recently, he delivered a lecture series in Europe on the bequest

of the USA Department of State. Frumkin earned at Ph.D. in sociology from the

University of Chicago in 1997, and is considered to be a national expert in philanthropic

studies.

Though it is not currently in publication, the Public Interest was an academic

journal with 40 years of history. The focus of the journal was to discuss issues of public

institutions and policy. Other past contributors included notable scholars such as Milton

Friedman and Peter Drucker.

Frumkin, P. & Keating, E. K., (2001b). The price of doing good: Executive compensation

in nonprofit organizations. Cambridge: Hauser Center for Nonprofit

Organizations, Harvard University.

This publication is an extension of Fumkin’s work presented in Public Interest.

He partners with Elizabeth Keating, a Certified Public Accountant who specializes in

financial management of non-profit organizations. She has held professorships at the

Carroll School of Management at Boston College, Boston University, Kennedy School

and Harvard Law School at Harvard University, the Kellogg School of Management at

Northwestern University, Stern School of Business at New York University, and the Not-

for-Profit Institute at Columbia University.

Frumkin’s focus on policy with Keating’s expertise in financial management

combine to produce a thoughtful analysis of compensation of executives in non-profit

organizations. Their study focuses mainly on testing hypothesis of identified differentials

in pay for for-profit versus non-profit executives. Conclusions of this study are limited to

correlations of organizational size and sub-sector.

Gibelman, M. (2000). What's all the fuss about? Executive salaries in the nonprofit

sector. Administration in Social Work, 24(4), 59-74.

The late Margaret Gibelman was professor and director of the PhD Program in

Social Welfare at the Wurzweiler School of Social Work, Yeshiva University, New York.

She earned a Doctorate in Social Work from Adelphi University and a Masters in Social

Work from Rutgers University.

Her publication in Administration in Social Work, a peer-reviewed, scholarly

journal with over 25 years of history, focuses on compensation of executive in non-profit

39

organization specifically within the social work sub-sector. Gibelman confronts mental

models she feels prevail in society. Though she may have had extensive experience in

the sector, her observations (logical as they may be) are not supported by extensive

research. That being said, she does provide a thoughtful analysis of compensation survey

information in both the for-profit and non-profit sectors.

Hallock, K. F. (2002). Managerial Pay and Governance in American Nonprofits.

Industrial Relations: A Journal of Economy & Society. 41(3), 377–406.

Kevin Hallock is an expert in compensation program design, executive pay and

labour markets. He is a distinguished professor of Economics and Human Resource

Studies and Director of the Institute for Compensation Studies at Cornell University. He

is also an active Research Associate at the National Bureau of Economic Research as

well as several other academic appointments. He acquired a Ph.D. in economics from

Princeton University and a B.A. in Economics, Summa Cum Laude, from the University

of Massachusetts.

His article in Industrial Relations, a peer-reviewed academic journal with over

200 referees, provides a thoughtful analysis of compensation data for non-profits.

Hallock provides a useful basis for statistical comparison between for-profit and

nonprofit professional by controlling for organizational size and position.

Hansmann, H. B. (1980). The Role of Nonprofit Enterprise. Yale Law Journal, 89(April),

835-898.

Henry Hansmann a distinguished Professor of Law at Yale Law School. He

received both a J.D. and a Ph.D. in economics from Yale University. His primary

research focus is on law and economics of organizational design.

The Yale Law Journal is a peer-reviewed publication in circulation since 1891. It

is one of the USA’s most cited legal journals, with one of the most citations per article on

average.

Hansmann’s article outlines some key theories in non-profit compensation that

have been referenced in many academic publications since, including the

“nondistribution constraint” and “screening phenomenon”. Though his theories require

additional testing through research, they do provide the basis for thoughtful comparison.

Hansmann, H. B. (1996). The Ownership of Enterprise. Boston: Harvard University

Press.

This publication is the text in which Hansmann expands on the principles

introduced in “The Role of Nonprofit Enterprise” (see above).

In this book, he explores how non-profit organizations differ from those in for-

profit, stemming from diffuse public ownership. This principle informs the theories

formed in the aforementioned article, as well as subsequent studies by peers.

Though his articulation of the differences between organizations is a valuable

basis for additional discussion and research, the hypotheses developed from this

foundation requires additional research.

40

McManus, A., Martin, G., Watt, A. & Williams, C. (2011). 2011 compensation and

benefits study: US and Canada. Arlington, VA: Association of Fundraising

Professionals.

This publication is the eleventh annual report analyzing compensation levels of

2,872 fundraising professionals in Canada and the USA who are part of the Association

of Fundraising Professionals (AFP).

This article is co-authored by established fundraising professionals, including the

chair and the CEO of AFP, and directed by Dr. Cathlene Williams in consultation with

the AFP Research Council.

This study is limited in its application as it is delivered only to AFP members,

which may skew extrapolations of the data. Though it does have some interesting

correlations between compensation, gender, sub-sector, geography and education, the

study itself does not provide insight into the causation of the compensation differential

between sectors.

Hopkins, B. R. (2007). The Law of Tax-Exempt Organizations (9th

ed.). Hoboken, NJ:

John Wiley & Sons.

Bruce Hopkins is a senior partner of the law firm Polsinelli Shughart PC. He has

received numerous awards for his work in non-profit law. He earned a J.D. and Masters

of Law from George Washington University. He has practiced law for forty years and

published over 25 books on legal issues.

His analysis of the compensation differential in his text informs the methodology

of comparative research between for-profit and non-profit sectors. He suggests controls

such as geographic region, organization size, position function, previous compensation,

and others.

The application of his work is more practical in focus, but does provide a basis for

more detailed comparative analysis between sectors.

Leete, L. (2001). Whither the Nonprofit Wage Differential? Estimates from the 1990

Census. Journal of Labor Economics. 19(1), 136–169.

Laura Leete is an associate professor and Director of the undergraduate program

of the Department of Planning, Public Policy & Managementat the University of Oregon.

She gained a bachelor degree at the University of California-Berkley, and a Masters and

Ph.D. in economics at Harvard. Non-profit economics and non-profit labor markets are

focuses of her academic research and teaching.

Her analysis of census data is thorough. She controls for previously misclassified

sub-sector data, verifying a wage differential indeed exists between sectors. Her work

does not attempt to prescribe why this differential exists, but does make valid

recommendations for future study.

Novack, J. & Barrett, W. P. (2008). Pay on steroids. Forbes, 181(10), 28.

41

Janet Novack is the manager of the Washington bureau of Forbes where she has

worked for over two decades. Novack specializes in stories involving tax shelters. She is

joined by William P. Barrett, who has been an editor and contributor to Forbes for over a

quarter century. Barrett also specializes in tax-related reports. Neither are considered

experts in compensation for non-profit organizations.

This particular article provides a very limited, cursory analysis of few facts. The

brevity of their publication is punctuated by their superficial analysis of non-profit

compensation practices.

Oster, S. (1998). Executive Compensation in the Nonprofit Sector. Nonprofit

Management and Leadership, 8(3), 207–221.

Sharon Oster served as the Dean of the Yale School of Management, and

currently works as a distinguished professor of Management and Entrepreneurship and

Director of the Program on Social Enterprise. She is considered a specialist of

competitive strategy, microeconomic theory, industrial organization, economics of

regulation and antitrust and nonprofit strategy.

Oster provides a very thorough comparative analysis of for-profit and non-profit

compensation. She finds correlation between organizational size, gender and salary,

while identifying barriers to compensation that only exist in the non-profit sector.

Philanthropic Research, Inc. (2011). 2011 GuideStar nonprofit compensation report (11th

ed.). Williamsburg, VA: Philanthropic Research.

Philanthropic Research is a self-purported ‘expert organization’ in all things non-

profit that operates under the banner “GuideStar”. The organization, based in

Williamsburg, Virginia, has non-profit status in the USA as a 501(c)(3).

Its work is largely critical of compensation practices for non-profit organizations,

though the conclusions it draws are based on information collected through charitable tax

filings. This survey-level research is used to evaluate and rate charities with which

donors are intended use for direction in their philanthropic decisions.

Preyra, C., & Pink, G. (2001). Balancing incentives in the compensation contracts of

nonprofit hospital CEOs. Journal of Health Economics, 20(4), 509-525.

Colin Preyra is an established researcher and policy advisor in the health

administration sub-sector. He holds various appointments, including Adjunct Scientist

at the Institute for Clinical Evaluative Sciences, Assistant Professor in the Department of

Health Policy, Management and Evaluation at the University of Toronto, and Senior

Economist at the Ontario Ministry of Health and Long-Term Care. He attained graduate

degrees, including a PhD, in Statistics, Economics, and Health Care Management and

Evaluation.

Preyra is joined by George Pink, who is also a senior researcher and professor in

health administration. Pink is also an Adjunct Professor in the Department of Health

Policy, Management and Evaluation at the University of Toronto, and an Associate

Professor, Department of Health Policy and Administration and Senior Research Fellow

42

at the Cecil G. Sheps Center for Health Services Research both at the University of North

Carolina. He too has earned multiple graduate degrees, including a PhD in Finance at the

University of Toronto.

In this particular study, Preyra and Pink provide a thoughtful comparison of

hospital CEO compensation in for-profit and non-profit settings in a single geographic

area (Ontario, Canada). Their analysis provides a depth that many comparisons in

compensation practices lack because they have controlled for industry and geography.

Reiter, K. L., Sandoval, G. A., Brown, A. D., & Pink, G. H. (2009). CEO compensation

and hospital financial performance. Medical Care Research & Review, 66(6),

725-738.

Kristin Reiter is an Assistant Professor, Department of Health Policy and

Management and Research Fellow at the University of North Carolina. She earned a

PhD in Health Services Organization and Policy and a Masters in Applied Economics at

the University of Michigan.

Reiter is joined by Guillermo Sandoval, who is a Senior Research/Planning

Advisor for the Economic Analysis & Evaluation Unit at Ministry of Health and Long-

Term Care and holds a PhD in Health Services Research and an MBA.

Adalsteinn Brown also brings a great degree of credibility to this team. He is

professor and Chair of Public Health Policy at the University of Toronto and Former

Assistant Deputy Minister, Ontario Ministries of Health and Long-Term Care and

Research and Innovation. He has received many distinctions, including: Rhodes Scholar,

Harvard National Scholar, and Top 40 Under 40. Brown is also an Associate at the

Center for Health Policy at Stanford University, and holds a PhD from Oxford.

These three authors join with George Pink (see above) to provide a thoughtful and

comprehensive analysis of decades of Ontario hospital financial performance data.

Controlling for geography, this group contrasts hospital compensation to find that

financial performance is not correlated to CEO compensation for non-profit hospitals,

unlike as it is in a for-profit setting.

Roeger, K.L., Blackwood, A. & Pettijohn, S.L. (2011). The nonprofit sector in brief:

public charities, giving and volunteering, 2011. Washington, DC: Urban Institute.

Katie Roeger is a Research Associate and Assistant Director, National Center for

Charitable Statistics for the Center on Nonprofits and Philanthropy—part of the Urban

Institute. She has graduate degrees in applied mathematics and economics, and has

worked as a mathematical statistician with the US Census Bureau. Roeger is joined by

Amy Blackwood and Sarah Pettijohn, both consultants with the National Center for

Charitable Statistics.

In this article, these authors summarize and provide a narrative of the The

Nonprofit Almanac 2011, another Urban Institute publication. Though this article

provides a helpful summary of key trends, its application is limited to providing context

of the size and broad-based value of the non-profit sector in the USA.

43

Roomkin, M.J. & Weisbrod, B.A. (1999). Managerial compensation and incentives in

for-profit and nonprofit hospitals. Journal of law, economics & organization,

15(3), 750-781.

Myron Roomkin is the Dean Emeritus of the Weatherhead School of Management

at Case Western Reserve University. He is considered to be an authority in human

resource management, and has an established history in arbitration of labour disputes. He

has published many books and articles peer-reviewed journals including, Harvard Law

Review, Industrial Relations Review, Journal of Law, Economics and Organization.

Roomkin has held appointments at the University of Chicago, the Kellogg School

of Northwestern University, American University’s Kogod School of Business and the

Weatherhead School at Case Western Reserve University. He has also served as dean of

the business school of American and Case Western Reserve Universities. He acquired a

master’s and PhD from the University of Wisconsin.

In this article, Roomkin provides on of the most academically significant

comparisons within the hospital sub-sector in the USA between for-profit and non-profit

CEO compensation. His analysis is thorough, and he compares compensation tools, with

job responsibilities, sector differences and performance measurements, yielding a well-

supported and well-articulated assessment of the current compensation differential.

Rose-Ackerman, S. (1996). Altruism, Nonprofits and Economic Theory. Journal of

Economic Literature,34(4), 701-728.

Susan Rose-Ackerman is the Henry R. Luce Professor of Jurisprudence with joint

appointments between Yale Law School and Department of Political Science. She is a

well-published author who focuses on administrative law and economic development.

Rose-Ackerman has also been a visiting research scholar at the World Bank, and has held

Guggenheim and Fulbright Fellowships. She earned a PhD in Economics and a Masters

of Philosophy from Yale University.

In her article, Rose-Ackerman claims that traditional economic theory is not

sufficient to provide a deep understanding of altruism and non-profit entrepreneurship.

She offers some interesting statistics of inter-sector comparison, including growth in total

amount of organizations and international differences in proportion.

However, her conclusions of ideological motivations of non-profit employees, as

an explanation for the wage differential, are not supported by the rest of the research

presented in her article.

Ruhm, C.J. & Borkoski, C. (2003). Compensation in the Nonprofit Sector. Journal of

Human Resources, 28(4), 992–1021.

Christopher Ruhm is a Professor of Public Policy and Economics at the

University of Virginia and a Research Associate at the National Bureau of Economic

Research. In 1996 –1997, he served as Senior Economist on the President's Council of

Economic Advisers, focusing on health policy and aging. He has previously taught at the

University of North Carolina and Boston University. Ruhm earned a PhD in economics

from the University of California at Berkeley.

44

Carey Borkoski is and instructor and Assistant Director and of the Graduate

Program in Public Policy at Johns Hopkins Bloomberg School of Public Health. She

earned a PhD at the University of Maryland Baltimore County and a Master’s in applied

economics at the University of North Carolina.

These authors use yet another data set to demonstrate that a wage differential truly

does exist between sectors. However, their hypotheses of causation are unsupported by

comprehensive research, making their contribution to this body of knowledge limited.

Senge, P. (1990). The Fifth Discipline: The Art and Practice of the Learning

Organization. New York: Doubleday, 8.

Peter Senge is a Senior Lecturer in Leadership and Sustainability at the MIT

Sloan School of Management. He has received many prestigious awards for his thought

leadership from well-recognized organizations including: the Journal of Business

Strategy, the Financial Times and BusinessWeek.

Senge is the founding chair of the Society for Organizational Learning, and has

written many widely acclaimed books, including The Fifth Discipline. He earned a

Masters in social systems modeling and a PhD in management from MIT.

Senge’s concept of ‘mental models’ is a well-known theoretical device that has

been referenced in many academic settings and publications. He has become renown for

coining this term in this best-selling book.

Silberman, S. J., & Crystal, G. S. (1986). Not-for-profit organizations need incentive

compensation. Personnel, 63(4).

Samuel Silberman was the Chairman of the Gulf + Western Foundation and cigar

manufacturing executive from Manhattan. His experience in the non-profit sector was

limited to his work as a philanthropist. Graef Crysal was the Vice-President and Group

Practice Leader for Towers, Perrin, Forster and Crosby an insurance company. Neither

author had extensive experience as a non-profit professional.

Their article advocates for the adoption of incentive-based compensation for non-

profit organizations simply because of the benefits it has in the for-profit sector. Their

conclusions are not supported by research, nor are they based on an established reputation

of managing non-profit organizations.

Spector, M. & Banjo, S. (2009). Pay at nonprofits gets a closer look. Wall Street Journal

- Eastern Edition, 253(71), A9.

Mike Spector is has been a reporter for the Wall Street Journal since 2006.

Spector was specifically assigned as a Philanthropy Reporter for slightly more than a

year. He has a Master of Science degree in Journalism from Columbia University.

Shelly Banjo has reported for the newspaper for over four years. She holds an

MBA from New York University.

These authors briefly describe a new call for oversight of non-profit compensation

programs due to recent scandals in both sectors of excessive compensation.

45

Spitzer, A. L. (2005). Executive compensation in nonprofit health care organizations:

Who’s in charge? Health Matrix: Journal of Law Medicine, 15(1), 67-82.

Lorry Spitzer is a Partner at Ropes & Gray LLP. The focus of his over thirty

years of practice is advising non-profit organizations in IRS tax requirements and law.

He lectures at Harvard Law School on the subject of non-profit law, and obtained his JD

from Boston College.

Through thoughtful analysis of compensation data for hospital CEOs in the USA,

Spitzer comes to the conclusion that there are cases of overcompensation and

undercompenstation in both sectors, though the non-profit sector is seemingly less

compensated on the whole.

While he provides a careful comparison, his application of Keynesian ‘free-

flowing’ market theory makes assumptions of consumer behaviour that are likely not

applicable to non-profit organizations. This simplistic application of economic theory

limits the relevance of his article.

46

Appendix I

A sharpened eye on charity pay (2009). Chronicle of Philanthropy, 22(4), 10.

Anft, M., Larose, M. D., & Voelz, M. (2001). Compensation rises by 6.7% for nonprofit

executives. Chronicle of Philanthropy, 13(24), 46.

Baldwin, W. (2004, September 6). Your charity dollars at work. Forbes.

Barton, N., & Gose, B. (2008). Executive pay outpaces inflation. Chronicle of

Philanthropy, 20(24), 2.

Barton, N., & Gose, B. (2009). Nearly 30% of nonprofit leaders took a pay cut this year:

Pay in 2008 grew quickly. Chronicle of Philanthropy, 21(18), 7.

Barton, N., & Gose, B. (2009). CEO pay grew last year, but a slowdown expected.

Chronicle of Philanthropy, 21(22), 2.

Barton, N., & Panepento, P. (2007). Executive pay rises 4.6%. Chronicle of

Philanthropy, 19(23), 16.

Barton, N., Di Mento, M., & Sanoff, A. P. (2006). Top nonprofit executives see healthy

pay raises. Chronicle of Philanthropy, 18(24), 15.

Barton, N., Gose, B., Bolton, P., Harrison, C., & Lopez-Rivera, M. (2011). Executive Pay

Median Increased 2% in 2010, Say Latest Chronicle Figures. Chronicle of

Philanthropy, 23(18), 18-19.

Barton, N., Gose, B., Bolton, P., Harrison, C., & López-Rivera, M. (2011). Modest

Raises Ahead Seen for Many CEO's as Economy Staggers. Chronicle of

Philanthropy, 23(18), 1-12.

Barton, N., Gose, B., Bolton, P., Harrison, C., & López-Rivera, M. (2011). Pay Grew by

2% for Charity Leaders, Chronicle Finds. Chronicle of Philanthropy, 23(18), 8.

47

Basinger, J. (2003). Corporate-level compensation raises questions at Harvard. Chronicle

of Higher Education, 50(12), S13.

Blum, D. E. (2005). Female charity executives win big increase in pay. Chronicle of

Philanthropy, 17(1), 35.

Blum, D. E. (2005). Fund raisers' pay hits new high, compensation survey finds.

Chronicle of Philanthropy, 17(14), 31.

Bryan, S. (2004). Pay for California charity leaders lags behind inflation rate, studies

find. Chronicle of Philanthropy, 16(23), 35.

Calian, S. (2002). Global panel targets executive pay. Wall Street Journal - Eastern

Edition, 240(58), C16.

Charity leaders who topped the Chronicle's list. (2009). Chronicle of Philanthropy,

21(22), 5.

Dejong, R. E., & Peregrine, M. W. (2008). Charities should heed new rulings on CEO

pay. Chronicle of Philanthropy, 20(10), 25.

Di Mento, M. (2011). Pay of Female CEO's Still Lags That of Men, While Economy

Hinders Raises, Study Finds. Chronicle of Philanthropy, 23(18), 21.

Donovan, K. (2009, October 1). Sick kids charity boss gets $2.7M send-off. Toronto Star.

Ebeling, A. (2005). The coming charity crackdown. Forbes, 176(3), 67-69.

Eisenberg, P. (2004). Excessive executive compensation needs to be stemmed. Chronicle

of Philanthropy, 16(14), 42.

Eisenberg, P. (2007). Skyrocketing CEO pay raises questions for charities. Chronicle of

Philanthropy, 19(8), 37.

Eisenberg, P. (2010). Above the pay grade. Chronicle of Philanthropy, 22(14), 7.

48

Eisenberg, P. (2010, February 21). IRS Needs More Money to Monitor Rapidly

Expanding Nonprofit World. Chronicle of Philanthropy, 26-28.

Fain, P., & Williams, G. (2005). The federal lens focuses on college chiefs' pay.

Chronicle of Higher Education, 52(13), B3.

Felicity, B. (1992, September 30). Hospital executives' pay rose sharply in decade. New

York Times, 14.

Firstenberg, P. B., & Lane, F. S. (2011). How Nonprofit Boards Should Set CEO Pay.

Chronicle of Philanthropy, 23(14), 13.

Frazier, E. (2008). Raises for female executives match those for men, but pay gap

persists. Chronicle of Philanthropy, 20(24), 6.

Frazier, E. (2011). More Grant Makers Gave Staff Members Raises in 2010, Survey

Finds. Chronicle of Philanthropy, 23(12), 12.

Gose, B. (2008). Executive compensation is the focus of a new charity tax form.

Chronicle of Philanthropy, 20(24), 4.

Gose, B. (2009). Report analyzes pay trends of charity CEOs. Chronicle of Philanthropy,

21(22), 6.

Gose, B. (2010). High CEO Pay Does Not Always Reflect Annual Earnings. Chronicle of

Philanthropy, 23(1), 6.

Gose, B. (2010). Nonprofit CEO pay under scrutiny. Chronicle of Philanthropy, 22(16),

8.

Gose, B. (2011). Boards Watch Anxiously as Nonprofit Pay Draws States' Scrutiny.

Chronicle of Philanthropy, 23(18), 20.

49

Gose, B. (2011). States' Scrutiny of Executive Pay Puts New Responsibilities on Boards.

Chronicle of Philanthropy, 23(18), 10.

Gose, B., Aikman, J., Kerkman, L., & Moore, C. J. (2004). Executive pay rises modestly.

Chronicle of Philanthropy, 16(24), 31-48.

Gose, B., Barton, N., López-Rivera, M., & Richards, A. (2010). CEO Pay Stalls in Bad

Economy. Chronicle of Philanthropy, 23(1), 5.

Hughes, R. J. (2007). Charities boost pay to lure talent. Wall Street Journal - Eastern

Edition, 249(56), W2.

Jensen, B. (2008). San Francisco considers salary limits for some charities. Chronicle of

Philanthropy, 21(4), 25.

Jensen, B., Kerkman, L., Moore, C. J., & Di Mento, M. (2005). Pay raises for charity

leaders keep pace with inflation. Chronicle of Philanthropy, 17(24), 37-57.

Joslyn, H. (2001). $48,000 is average pay for Canadian charity CEOs. Chronicle of

Philanthropy, 14(4), 32.

Joslyn, H. (2002). Survey reveals income gap between male and female fund raisers.

Chronicle of Philanthropy, 14(7), 19.

Julian E, B. (2001). Executive pay: A special report; It's a good living, but not like

industry. New York Times, 6.

June, A. W. (2005). College presidents break into the million-dollar club. Chronicle of

Higher Education, 52(13), B12-B14.

Karen W, A. (1995, September 5). Large charities pay well, survey finds. New York

Times, 12.

Kellner, T. (2004). Losing faith. Forbes, 174(12), 54-56.

50

Kellner, T., & Lenzner, R. (2003). One hand giveth. Forbes, 172(9), 108-112.

Kerkman, L. (2003). Salary gap is shrinking for female charity CEO's, survey finds.

Chronicle of Philanthropy, 16(2), 57.

Langley, M. (1996). IRS gains more-flexible power to curb excessive pay at charities.

Wall Street Journal - Eastern Edition, 228(27), B2.

Laster, J. (2010). $700,000 pay for leader of civic-literacy research group raises

eyebrows. Chronicle of Higher Education, 56(31), A17-A18.

Lewis, N. (2008). Chief fund raisers at colleges win pay rise of 4% in 2007-8. Chronicle

of Philanthropy, 20(11), 19.

Lipman, H. (2001). Unbalanced pay scales. Chronicle of Philanthropy, 13(16), 33.

Lipman, H. (2002). Charity executives' median pay is $42,000, report says. Chronicle of

Philanthropy, 14(6), 49.

Lipman, H. (2005). A growing disparity. Chronicle of Philanthropy, 18(3), 26-31.

Lipman, H. (2006). Pay gap narrows for male and female nonprofit executives, study

finds. Chronicle of Philanthropy, 19(1), 13.

Lublin, J. S., & Fatsis, S. (2004). Compensation at nonprofits is scrutinized. Wall Street

Journal - Eastern Edition, 243(102), C1-C6.

Marker, R., & Harvey, T. (2009, November 12). Salary survey distorts nonprofit pay

picture. Chronicle of Higher Education, (22), 40.

Milt, F. (1992, April 12). Business and health: I.R.S. studies pay of hospital chiefs. New

York Times, 2.

Novack, J., & Barrett, W. P. (2008). Pay on steroids. Forbes, 181(10), 28.

51

Oster, S. (1998). Executive Compensation in the Nonprofit Sector. Nonprofit

Management and Leadership, 8(3), 207–221.

Panepento, P., & Wilhelm, I. (2007). Bonuses for top nonprofit officials are growing

quickly in size. Chronicle of Philanthropy, 19(23), 17.

Perry, S. (2010). Senators Question Executive Salary and Other Perks at Youth Charity.

Chronicle of Philanthropy, 22(9), 21.

Perry, S., & Williams, G. (2009). Accepting less. Chronicle of Philanthropy, 21(18), 11.

Samuels, C.A. (2011). Survey: Bigger Districts Pay Their Leaders More. Education

Week, 31(7), 5.

Sarah, A. (2007, February 8). Smithsonian executives' pay tops president's, report finds.

New York Times, 16.

Schwinn, E., & Lipman, H. (2004). Big nonprofit salaries face government scrutiny.

Chronicle of Philanthropy, 16(18), 34-36.

Schwinn, E., Wilhelm, I., Larose, M. D., Krauze, S. W., & Murray, M. (2003). Nonprofit

CEO's see salaries rise. Chronicle of Philanthropy, 15(24), 27.

Smith, P. (2010). Few Charities Pay Exorbitant Salaries to Their CEO's. Chronicle of

Philanthropy, 22(15), 9.

Spector, M. & Banjo, S. (2009). Pay at nonprofits gets a closer look. Wall Street Journal

- Eastern Edition, 253(71), A9.

Spector, M. (2009). Charities fear new pay limits will hurt executive donations. Wall

Street Journal - Eastern Edition, 253(38), A11.

Stephanie, S. (2004, March 21). Questions about some charities' activities lead to a push

for tighter regulation. New York Times, 23.

52

Stephen, L. (1999, November 17). New rules lift the lid on nonprofit pay. New York

Times, 2.

Strom, S. (2010, July 26). Lawmakers, tightening belts, question nonprofit salaries. New

York Times, 12.

Thomas, K. & Schmidt, M.S. (2010, August 31). Practices of Dodgers' Charity Are Said

to Be Under Scrutiny. New York Times, 14.

Thomas, K., & Schmidt, M.S. (2010, July 8). Questions arise about executive's pay at

Dodgers charity. New York Times, 10.

Top charity executives earn 6 figures. (1993, April 5). New York Times, 15.

Welsh, J. (1995). Charities still raise salaries of CEO's, to lure officers, used to corporate

pay. Wall Street Journal - Eastern Edition, 226(45), B7.

Whitehouse, K. (2005). Questionable executive pay exists at charities, but it isn't the

norm. Wall Street Journal - Eastern Edition, 246(28), D2.

Wilhelm, I. (2003). Pay varies widely for executives of nonprofit associations and

watchdogs. Chronicle of Philanthropy, 15(24), 31.

53

Appendix II

Anderson, A. (1999). Ethics for fundraisers: A case of compensation. Indianapolis:

Center on Philanthropy at Indiana University.

Coopers & Lybrand. (1995). Total compensation for not-for-profit organizations. New

York, NY: Coopers & Lybrand.

Day, N.E. (1994). Designing and managing compensation and benefit programs. In R.D.

Herman and Associates (eds.). The Jossey-Bass Handbook of Nonprofit

Leadership and Management. San Francisco: Jossey-Bass, 557-590.

Frumkin, P. & Keating, E. K., (2001b). The price of doing good: Executive compensation

in nonprofit organizations. Cambridge: Hauser Center for Nonprofit

Organizations, Harvard University.

Kaufmann, K., Walker, R., & Kohler, F. (1999). The nonprofit guide to compensation

policies. San Francisco, CA: Management Center.

Knauft, E. B., & O'Connell, B. (1993). Financial compensation in nonprofit

organizations. Washington, DC: Independent Sector.

Maehara, P. V. (2008). Compensation. In J. G. Pettey (Ed.), Ethical fundraising: a guide

for nonprofit boards and fundraisers, Hoboken, NJ: John Wiley & Sons, 89-103.

National Center for Nonprofit Boards (U.S.). (1999). Chief executive compensation: A

guide for nonprofit board members. Washington, DC: National Center for

Nonprofit Boards.

Pianko, H., & Samuels, D. G. (1998). Nonprofit compensation, benefits, and employment

law. New York: John Wiley & Sons.

54

Quatt, C. W., & Vogel, B. H. (2010). Nonprofit executive compensation: Planning,

performance, and pay. Washington, DC: BoardSource.

Senger, J. A. (2005). Designing a not-for-profit compensation system. Hoboken, NJ: John

Wiley & Sons.

Silberman, S. J., & Crystal, G. S. (1986). Not-for-profit organizations need incentive

compensation. Personnel, 63(4).

Young, D. R., & Cohen, L. (1989). Careers for dreamers & doers: A guide to

management careers in the nonprofit sector. New York, NY: Foundation Center.

Young, D. R. (1984). Performance and reward in nonprofit organizations: Evaluation,

compensation, and personnel incentives. New Haven, CN: Institution for Social

and Policy Studies, Yale University.

55