Thursday, May 14, 2009

Lessons Not Learned

When I first moved to DC and was looking for a place to volunteer, I quickly came across Food & Friends, a nonprofit that, "Provides meals, groceries and nutrition counseling to people living with life-challenging illnesses such as AIDS and cancer."

I was impressed by the Food & Friends volunteer corps pounding the pavement in Dupont Circle, selling the mission, advertising the group's services, and recruiting volunteers. Within weeks of my first contact with Food & Friends, however, news broke in the Washington area that the group's executive director, Craig Shniderman, was making over $350,000 a year in salary and benefits.

I mean, I'm not qualified to say what could be considered "competitive" compensation for a person in his position, but I do know that compensation tends to follow budget size in the nonprofit sector. According to yesterday's piece in the Washington Examiner, that level of compensation accounted for nearly 4% of the organization's overall budget in 2007.

If these folks continue to successfully fundraise in order to pursue their mission, maybe this is not such a problem. Foundations and government organizations can easily access or solicit information on executive compensation and decide for themselves whether 4% is "too high."

Well, according to The Examiner, the Montgomery County Council has done just that.

The Council put their foot down on Shniderman and Food & Friends yesterday, with Councilman George Leventhal, D-at large, rallying the troops to remove $55,000 in county funding that was earmarked for the coming year.

Councilman Leventhal put it simply, "“They can keep paying him, but we’re not going to contract with them.”

One could say it's a shame that this funding will not reach Food & Friends during a time when such services are needed more than ever or that the Council's decision was more about scoring political points than anything else.

But seriously, $350K?! Whether I worked at Food & Friends, was a recipient of their services, or a prospective funder, I think I'd still feel that number was tough to swallow.

How high is too high when it comes to executive compensation? Should Food & Friends have "learned their lesson" after initial bad press?


Zack said...

Schneiderman makes more money than the President of the organization I work for, which has a budget five times the size of Food and Friends, and compensates our President .05% of the agency budget. The compensation question is "beyond my pay grade" too, but both the dollar amount and the percentage of the agency budget seem exorbitant to me.

Kehinde A. Togun said...

This is tricky. While I am inclined to say $350K is too high a for a nonprofit executive, I am not comfortable with lawmakers trying to legislate how much an executive makes - in this sector or any other.

Undoubtedly, 4% of the organization's operating budget is a lot (or seems a lot). However, there is something to be said for paying people well because they do marvelous work. Whether or not Shnidermann does marvelous work is beyond me. However, there's a price for talent that the nonprofit market has yet to figure out how to regulate/maintain.

Pilar Oberwetter said...

I am in complete agreement with Zack-- not only is there something truly unethical about knowing how your salary compares in relationship to the size of your agency's budget, and still continuing to accept that payscale-- but there is also something deeply disturbing about knowing that demand is increasing and resources are decreasing for the exact services that you provide--food for the poor. I am very comfortable for lawmakers to note this discrepancy and opt to direct their funding elsewhere. Lawmakers are charged with the responsibility of distributing public dollars, and public dollars have better uses than paying a $350K salary.

Jonathan said...

The salary is quite high, but the executive isn't the one who gets hurt when funds are cut. His salary is likely already set by the board, so the money instead has to get taken out of other budget areas. Couldn't the council make a restricted gift that only goes to direct services? If several major donors did that, they could achieve the change they want without hurting the clients.

Sonya Behnke said...

The Council could certainly make a restricted gift to only support direct services (if Food and Friends wanted to accept the funds on those conditions). Depending on how Food & Friends does their cost allocations, executive compensation or "management costs" may be wrapped into indirect costs. Nonprofits have a difficult enough time convincing grantmakers to support indirect costs even with extremely low executive comp and overhead. This is another reason why I can't understand why Food & Friends hasn't woken up to these funding realities. Finding a way to purposefully exclude executive compensation from its underlying role in the budget might be easier said than done.

Of course, the bottom line is that this is partially a political decision on behalf of the Council. That may be the main factor to this all-or-nothing approach.