The ethical principles issued this month by a committee of charity and foundation leaders offer little new and fail to deal with one of the most critical issues facing the nonprofit world — “out-of-line” executive compensation, says Dan Prives, author of Where Most Needed.
“The problem with these principles is that they are largely obsolete due to the rise of CEO power in organizations, as reflected by the large and disproportionate increase in CEO pay,” he writes.
Mr. Prives, a nonprofit-finance expert, takes a jab at some of the chief executives or executive directors who drew up the 33 principles of “ethical conduct, accountability, and transparency,” saying they earn salaries that are much higher than the next-highest-paid staff members at their own organizations.
His targets include Diana Aviv of Independent Sector, the coalition of charities and foundations that created the Panel on the Nonprofit Sector, which drafted the ethical guidelines; Edward Skloot, formerly of the Surdna Foundation; and William S. White of the Charles Stewart Mott Foundation.
He says he found even bigger gaps at organizations headed by two people who commented on the new principles — Trent Stamp, president of Charity Navigator, a watchdog organization, who called them a “positive first step” on his blog, and Peter V. Berns, executive director of the Maryland Association of Nonprofit Organizations, who criticized them in The Chronicle of Philanthropy for failing to set up a meaningful self-regulation system.
“What this quick survey of CEO pay shows, I think, is why neither the Nonprofit Panel nor its supporters nor its critics in nonprofit circles have identified executive pay as an ethical issue with charities,” adding that they “all appear to be players in the game, all beneficiaries of the strong CEO/weak board syndrome that pervades the charity sector.”
Mr. Prives also compares the final version of the principles with the discussion draft, highlighting ways the text was watered down in areas including conflict of interest, whistleblowers, sharing of program evaluations, board reviews of programs, and board compensation.
Do you think the Panel on the Nonprofit Sector should have addressed the issue of executive compensation? Do you agree that such compensation has ballooned disproportionately?
Share you thoughts by clicking on the comment link below.
