Monthly Archives: January 2010

Thoughts on Compensation for Nonprofit CEOs

On Forbes, there was a recent article by Betsy Brill about compensation for nonprofit CEOs.  There’s been outcry in the last few months over nonprofit CEOs receiving multi-million dollar salaries.  Is this unreasonable, or is it justified?  And what does it say about the nonprofits?  The title of Betsy’s article–“Nonprofit CEOs Are Worth Every Dime“–suggests her answer to those questions.  Here’s an excerpt from her article as well:

Leading nonprofit watchdog sites like GiveWell and Guidestar have called executive salaries a “red herring” in rating the effectiveness of a charity. Indeed, while it is important for donors to scrutinize the expenses of the organizations they give to, I advise against singling out any one budget line item, such as employee salaries, unless it is considered in the context of an organization’s overall operational costs and revenues. In addition, I urge donors not to reflexively become alarmed by what may seem like high executive pay. Keep in mind that the highest paid CEOs are overseeing complex multimillion-dollar ventures…

In the words of Charity Navigator CEO Ken Berger, “the most critical dimension in evaluating a nonprofit has to do with achieving meaningful results.”

This article also led me to think further about compensation, monetary and otherwise.  Here was my response to Betsy’s article:

Dear Betsy, thank you for your message on compensation.

Compensation in the forprofit/nonprofit world should be based on the following —

* Execution/Results

* Value delivered to agreed-upon stakeholders (shareholders, customers; donors, community)

*Experience/Track Record leading to effective governance.

Having said that, how much should you be compensated if you achieve $150 million in sales for a forprofit company?  How much if you deliver 150 pounds of food, and save 5 million lives?   Do both deserve $10 million in salary?

The Nonprofit CEO is saving lives. Feeding millions of children who might not otherwise survive.  Their personal life may not be existent because they are dedicating so much of their life.

How do you price that?

Is it a sacrifice?  But it’s their choice. It’s their decision. Ideally it is not simply a job, but should come from a desire to serve and to give of one’s talents, strengths and heart on behalf of the community.

The Forprofit CEO is creating value for their shareholders, which is what is agreed upon. But don’t look away so quickly. A CEO provides so many other benefits within an effectively run company: benefits, healthcare and jobs which provide a living for millions of people and their families. That, too, is an investment in the community.  It is not only the Nonprofit CEOS who do good and distribute wealth. Forprofit CEOs are essential to a healthy economy and peaceful world.

How do you price that?

At the end of the day, I’d say both the Nonprofit CEO and the Forprofit CEO ‘deserve’ the $10 million compensation because they are delivering so much value. However, I’d hope that both parties, of their own will, would choose to accept less.  A former comment on this post pointed to this, that the money can be used to do more good.

Hopefully we find a balance.  People should be compensated well. They should also be working because it is an honor, a passion and a desire for results which strengthen our community.

Pamela Hawley
http://www.universalgiving.org
https://pamelahawley.wordpress.com

Where Philanthropy is Needed Most: We All Count

With most philanthropy, we try to send it where it is needed most.  For those of us globally minded, the image that strikes our mind is that of a starving child or a refugee camp; for those of us locally minded in the United States, it might foster the image of a soup kitchen or line of welfare recipients.

Of course we know there are many other needs, less seemingly urgent, but important: a high schooler who needs a computer to succeed.  A teenager who needs a mentor to help model positive values, take a walk or be a sounding board.  A forest hiking trail that needs to be cleaned up from litter, or a stray dog who needs a loving home.

We can’t forget about this on the international front as well.  We often relegate certain countries as not needing the attention, because they are “doing fine.”

Are they really?  Let’s take a look at some of these countries.   Spain has an unemployment rate of 19.4% which is expected to surpass 20% this year.  Ireland has a 12.4% unemployment rate and with GDP ranked 53rd in the world, showing their productivity and job possibilities are very low.  They are also extremely dependent on Britain for funding.

Anecdotally, I was in Peru a few years ago, just one hour outside of the capital of Lima. I had come in viewing Peru as a beautiful colonial country; Lima indeed represented this view.  Nineteenth century cobblestone streets, an historic square, gorgeous bluffs where adventurers explored were so beautifully apparent.

Yet one hour outside of Lima, it looked like a hazy war zone.  Most of the building materials were sandy concrete, crumbling and deteriorating.   Rubble and rising dust littered the air with a near blinding, grey haze.  Women on average had six children and were severely abused by their husbands. There are no shelters. There are no food pantries. There are no jobs for women nor job training.  There was no out.

We have a crisis here that no one seems to recognize. And I believe that crisis also exists in other ‘developed’ countries that need our help, too.

Someone out there needs that valuable job to provide for their families. Someone needs a counselor to help them through a tough situation.  Someone needs that extra $200 so they can afford the tuition for college.

It doesn’t have to be a genocide.  Everyone needs help. Please don’t overlook one single being.  We all count.

How Long Are Your Meetings?

How long does a good meeting need to be?

Not very long, according to Anthony Tjan.  In an article on the Harvard Business Review website, “The Key to Shorter, Better Meetings,” he outlined three points that should cover the purpose for every meeting:

1. To inform and bring people up to speed.
2. To seek input from people.
3. To ask for approval.

By examining how a meeting fits into these points, we can be more focused and aware of our time and goals.

I appreciate the three points, as they keep the meeting clear, focused, and open for two-way communication. Sometimes I find that not every meeting, however, needs approval, or needs input, or needs education. Different meetings can serve different purposes.

I have found something interesting, however. We seem to think meetings should last at least one hour.  But I have found with good partnerships, people know the answer as to whether it will work, and what role, usually within 20 minutes. If each party knows their vision extremely well, they are able to communicate it succinctly and the meeting can be purposeful and short.

20 minutes.

And, it’s inspiring when you are on the same page. Then get back to work to make the partnership happen, rather than speak about it!

Invest in People

I often emphasize with my team about how important people are to UniversalGiving’s values and vision.  Whether that’s a deep appreciation and value for every member of our team, or an awareness of the individuals we’re serving, or a commitment to integrity and respect in our relationships with partners, we always want to remember that people are at the core of all we do.  I read an article on the Harvard Business Review website which also came to a conclusion about the value of people.  Scott Anthony wrote, “Why Great Innovators Spend Less Than Good Ones,” about why focusing on set plans and funding is not the best business plan.  Here’s an excerpt:

It seems like every day features a slew of stories where leaders commit billions to new geographies, technologies, or acquisitions to demonstrate how serious they are about innovation and growth.

Here’s the thing — these kinds of commitments paradoxically can make it harder for organizations to achieve their aim. In other words, the very act of making a serious financial commitment to solve a problem can make it harder to solve the problem…

So what should leaders do?

Be frugal with financial resources but generous with human resources. What holds disruptive innovation back in most organizations isn’t a lack of money. It is a lack of committed people, a surplus of inappropriate mindsets, and a whole series of standard operating procedures that run counter to the fast-cycle decision making, in-market learning, and iterative approach to strategy required for disruption.

I’d also like to share the comment I made in response:

Scott, excellent comments and business reasoning – which holds true for the nonprofit realm as well. Invest your resources and time in people, not in research and locking yourself down to some staid vision.

Whether you have cash in the bank or not, the scrappy, nimble mentality wins. It means always using your cash wisely. It means caring about every dollar spent and not taking it for granted. It means investing in people and getting them to think creatively about how to bring about a result.

Thank you for wise advice we need to hear again. Big company, small company, large nonprofit, small nonprofit — appreciate your resources, use them wisely, and stick to your vision. The creativity comes from people not dollars.

Pamela Hawley
Founder and CEO
UniversalGiving

Align with Integrity

I love collaborations, and the opportunity to build a relationship with another organization or with other individuals serving our community.  Like any relationship, in a business alliance it’s so important to consider common goals and values to ensure a healthy, effective working relationship.  Some while ago I read a strong blog post from Rosabeth Moss Kanter on the subject of alliances, “How To Strike Effective Alliances and Partnerships.”  She wrote about both the benefits and the hazards of alliances, and identified eight factors she felt were essential to consider for a strong alliance.  One of these was Integrity.  Here’s a brief excerpt from Rosabeth’s writing:

Integrity. Trust is essential. Alliances fall apart in conflict and lawsuits when partners do not act ethically toward one another nor strive to contribute to the other’s success.

Alliances seem a way out for organizations that want to remain independent but need lower costs, greater scale, or broader market scope quickly. It seems easy, and yet execution is difficult. Before rushing into another company’s arms out of desperation, remember why strategic alliances are fragile, and think carefully.

I was struck by Rosabeth’s post, and shared a few thoughts of my own:

Rosabeth,

Thank you for this timely, and timeless article.

It’s very interesting that we often look at the business purpose to the alliance, which is essential. However, equally important is what you point out regarding Integrity.

Ensuring that you both share similar values, and, value similar things, is essential. Most people talk in general about integrity or values, but it’s important to really drill down into several areas:

  • Short vs. Long-term Relationships–how one conducts business and values short versus long-term relationships. Are you here to close the deal quickly, or to establish a long-term relationship?
  • Verbal vs. Written Communications–what one values in written and verbal communications. Do you believe that in-person or written communication is most essential for effective management?
  • Priorities in Values–i.e., people might value efficiency, decorum, compassion — but in a different order. That could solidify or breakdown an important relationship.

 

Thank you for an insightful article.

 

Sincerely,
Pamela Hawley
Founder and CEO
UniversalGiving