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June 26, 2008

Charlotte United Way President Gets Big Benefits Increase

The president of the United Way, in Charlotte, N.C., received an increase of more than $700,000 in retirement benefits for the 2007 fiscal year, reports The Charlotte Observer. The annual compensation for the president, Gloria Pace King, is now more than $1.2-million, with her benefits package rising from $108,590 to $822,507.

The organization said the increase is part of a Supplemental Executive Retirement Plan for certain managers, with the increase in benefits covering an 18-month period, as the plan is being applied retroactively to the beginning of 2006. Additionally, the plan may include payments promised in a 2001 agreement that were not previously delivered, the article noted.

The agency’s board chairman defended the increase as deserved; Ms. Pace King helped the Charlotte United Way raise a record $44-million last year.

But Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a charity watchdog group, countered: “Nonprofit executives deserve fair compensation packages, but this is outrageous.”

As comparison, the United Way of Greater St. Louis, which raised $69-million last year, paid its leader $254,487 in salary and contributed $75,826 for benefits, according to the agency’s tax filings, the article said.

Thursday June 26, 2008 | Permalink

Comments

1. With examples like this of outlandish and frivolous use of donor funds, it’s no wonder why some people have lost confidence in the ethical oversight and distribution of philanthropic giving in our culture.

   — Patrick Davis    Jun 27, 08:47 AM    #

2. I live in Charlotte and fear that this is going to effects the hundreds of other charities in Charlotte that do an exceptional job. I am still amazed that the BOD sees nothing wrong with this excessiveness. My only hope is that the many orgs. that receive funding from UWCC will have their BOD’s confront the UWCC board and hopefully admit this is excessive. If they don’t I fear for the well being of so many in need in our community.

   — Vivian    Jun 27, 10:06 AM    #

3. It sounds like the first two comments are from people that are extremely jealous. Yes, the compensation sounds crazy, but which one of you have raised 44-million in 12 months?! A little perspective /reality check, $400,000 is only 1% of what was raised. We are looking at about 3 plus % return to the CEO who raised 44-million!! In addition, sales professionals typically receive 18% to 30% pending the industry they are in. (18% is in excess of 7.9 million so count your blessings.) So, stop griping! Look at all the good 44-million can do. And, if charities do not compensate CEO’s you will loose people that can actually raise 44-million in 12 months, something you apparently cannot do. If you can, you would have stated as such. Or, lets take your direction and they can hire a CEO with a salary and benefits of say 79,000 and then you’ll have a CEO that raises 2 or 3 million in 12 months. Is that what you want? Anyway, yes, it is a crazy amount of money that the Charlotte United Way President receives, but that person is doing something you and I cannot do and relatively speaking is not receiving that much money with regard to what was raised. You have got to understand that salary and income ARE NOT distributed evenly. It is based on your value regarding on what you contribute. Who are you to say that the CEO received too much money when 44-million was raised. Go back to school, like I am, get a better job so you can contribute to the economy and/or to charities and get paid more so you can be more content to stop your griping! Hurray and loud applause for 44-million being raised to help those who need help!

   — Tyler    Jun 27, 11:49 AM    #

4. Gosh Tyler, Pace did not raise the $44 million – she simply oversaw the coercive efforts of Charlotte’s large corporations to squeeze their employees. I live in Charlotte, and the brainwash culture here on workplace giving permeates everything. My wife was subtly threatened by her boss for years to pledge UW 10% of her salary as manager “to set the example for her staff on appropriate giving.” This is on top of mandatory presentations and films for all employees and public displays of individual giving levels. King’s role is to orchestrate these maneuvers and provide resources and ‘goodwill’ publicity to corporate executives. It’s an easy job to do in a caring community where conformance and groupthink is overwhelming.

   The net result? Lots and lots of cash from blue collar employees who believe that UW is a good steward of their hard-earned donations. And of course 15% less proceeds (after UW’s G&A cut) to the beneficiary orgs who make it through UW’s gauntlet of bureaucracy and favoritism.

   The fact of the matter is that Pace interviewed with 100 other applicants, so recruiting was not an issue in Charlotte, especially for a starting salary well in excess of a quarter mil. Note that this UW chapter was already very successful prior to her engagement, so she gets no credit for a turnaround.

   Your stats on private sector compensation are of course irrelevant – Dorfman is far more knowledgeable on how to compare non-profit overhead and he is the reference here, not you. After all, this isn’t corporate profit here – it’s charitable donations!

   Particularly vexing to me is that she wasn’t making any moves to jump off this gravy train, so why did the board thrust the pension upon her? One has to wonder why a volunteer board makes and defends ill decisions like this against the best interests of all stakeholders? Even more disappointing is to consider how a supposedly passionate-to-the-cause non-profit executive reconciles their commitment to their org when taking this kind of money. It’s an extraordinary act of fiduciary ignorance and the very worst kind of greed… a nasty stain on a well-meaning community.

   — Steve Hofstatter    Jun 28, 12:20 PM    #

5. I agree that this is outrageous. This is what we know. I would love to know if her expense account has been used for her own enrichment. I hope that Charles Bowman, Susan Faulkner, Barbara Desoer, Peter Kelly, Kenneth Lewis and Timothy Mayopoulos from Bank of America are paying attention to this. Please stop “encouraging” your employees to contribute to this organization.

   — Joseph    Jun 29, 08:30 AM    #

6. Well written response, Steve. We may have to agree to disagree. I live in California and do not know the charitable giving culture in Charlotte. Nevertheless, with 100 applicants and the board providing the compensation package, the board seems to be saying that they need the contacts/relationship etc that the CEO has in order to continue bringing in money to the amount of 44 mil. The CEO is apparently worth it, or, there needs to be an investigation with the board members. If there is no investigation or nothing to warrant one, then the board picked the best candidate for the job and wants to keep that individual.

   Charities must pay CEO’s similar salaries as the private sector or they will not be able to hire private sector CEO talent that the non-profit industry so desperately needs (hence my private sector compensation references are relevant). The CEO at my wife’s work, which is a non-profit hospital, receives an inappropriate amount of money (as would seem by the average employee), much more than the case we are speaking of. Yet, she was able to turn a hospital that was in the red to the black and is being paid her worth. That is just the way it goes. Otherwise, the hospital could keep the salary in a range which would not have people blink an eye at, but also that salary range only attracts people that can manage a hospital-but it stays in the red. You have to pay the big bucks, so to speak, to attract Executive Managerial talent that can do spectacular things. If not, those individuals will simply keep their resume out of the picture and stay in the private sector.

   I would be interested to know what the United Way, in Charlotte, N.C. raised the last three years. If it is close to 44 million for each year then possibly the board should be investigated.

   Sorry to hear what has happened to your wife. That is truly a heinous situation. Setting emotions aside-which is no small thing to do- your first paragraph in regarding a ‘brainwash culture’ and threats from superiors at work, is, respectfully, irrelevant to the CEO’s income. Nevertheless, your first paragraph being true, I hope that those managers find themselves in jail. I have no patience nor tolerance for what you described!

   Your second paragraph also does not support a negative view of the compensation for the CEO. Although, I share the views of people that do not particularly like the UW. The 11% to 12% of my gross that I donate each year has never gone to the UW. My wife and I always donate straight /directly to the cause of choice. By the way, we have 5 children, one is type I diabetic, yet we donate anyway because we know others have difficulties and struggles as we do. We have very large expenses with a very average income. This may not be relevant to the discussion at hand, I just wanted you to know that I understand giving and are very average in income, never having even purchased a home myself due to the cost. That said, I never gripe about an extra-ordinary salary a CEO received unless there is wrong-doing or criminal activity.

   I agree with your last paragraph, first sentence. I also wonder about the board in the second sentence of same paragraph. With the rest of the last paragraph, I disagree completely. It is none of your business – I do not say that with malice. The truth of the matter is that it is not our business to spat such negatives as ‘worst kind of greed’ and ‘a nasty stain…’ Why? Because, unless there is reason to investigate wrong doing, the board has chosen the very best candidate for the job. They are paying the CEO the value they see in what the CEO contributes.

   Crazy outrageous salaries are relative to an individuals state of mind and people gripe because they are comparing the crazy salaries to their own income, but that does not make it wrong, greedy or nasty. Also, it is not an ‘extraordinary act of fiduciary ignorance’ unless the CEO knows within herself that she is not worth the compensation package. And, that is a state of mind/opinion, and, while we have our own opinions about the individuals contribution that determines the worth of the salary, we can never get inside another’s mind, therefore, we cannot judge. That said, I probably agree with your opinion of the CEO’s true worth, nevertheless, we cannot say it is fiduciary ignorance because the CEO may very well think that she is contributing enough worth to the business/cause to justify the compensation package. Simply put, the board picked the best candidate and is paying what they feel is the appropriate salary. Unless shown otherwise, I stand with my first comments.

   — Tyler    Jun 30, 01:48 AM    #

7. Tyler, lots to chew on in your reply. It seems that we at least agree on the premise of responsible fiduciary management for these organizations

   I would guess that workplace giving here is similar to most places around the country. Charlotte happens to be a banking town with affluent corporate offices. These companies are valuable to the community in many aspects – including employment, civic involvement, and corporate giving. They also drive workplace (employee) giving in a big way, and have deep affection for UW – particularly for the publicity afforded to key executives who spearhead campaigns at their companies (and typically comprise the UW board). It’s not unusual for mid-level bank execs to make over half a mil, so these guys don’t think much of a UW chapter prez salary and are poor judges of charitable executive compensation. Of course orgs like Dorfman’s are available to advise them should they ever care to seek it.

   It is here I have to challenge your logic that non-profit executive compensation should be the same as a for-profit. If that was reasonable, then the paltry salaries of UW staff employees should be equivalent to corporate staff employees. The fact of the matter is that best non-profit execs are in it for the passion of making a difference, NOT the cash. High compensation is clearly not in the org’s best interest, nor that of their donors and beneficiaries.

   As I said, King has not effected any huge turnaround – she took over a successful chapter. According to Charity Navigator, revenue growth of less than 9% during ’04-‘06 was outstripped by an admin expense spike of 43% (her latest package not included) . . . hardly, as you stated, “executive managerial talent that can do spectacular things.” There seems no better measure of leadership than to be a good steward of donor contributions, and UW Charlotte is losing ground on this count.

   Why is it, as an advocate of UW, that you give directly? Is it because you can select your beneficiaries better than some community agency can? Is it the G&A cut they take out of what you intend for your beneficiary? Or do you believe that those who participate in workplace giving would not otherwise give and this is better than nothing?

   Note that your wife’s non-profit hospital is not the same as a charity. As a city-county agency, my wife’s regional hospital authority is also a non-profit. But UW’s revenue is donor dollars, not taxpayer dollars, and although I think our hospital execs make way too much, they aren’t expected to accept their packages on the basis of passionate benevolence toward the org.

   Donor revenue holds a very special status in my mind, and every expense of a charitable non-profit should be considered with sincere gravitas. To my point…look at the missions of orgs like Salvation Army, AFSC, CARE, and Mercy Corps. – they are all about squeezing the most out of every donor dollar. Note that the Mercy’s CEO made $195k against $205 mil in revenue and CARE’s prez made $236k against $646 mil. Think these guys should be – or want to be – compensated on the basis of revenue? You still think a payout to UW’s King of $1.2 mil against $44 mil revenue is reasonable?

   Regarding my claim of the board’s fiduciary ignorance, our newspaper awaits a copy of King’s employment agreement. If that agreement spells out this level of compensation and pension benefit, then the board must execute accordingly. But if it didn’t – and assuming she wasn’t threatening to leave – why on earth would they throw money at her? Her worth was clearly no more than her existing package!

   The board suggests that her talent is unique. The 100-applicant point I made was to remind us that there were other candidates for the job and that in fact she started out among the top five most highly compensated chapter prez’s nationwide. Since then she’s received generous bonuses, and of course a pension deal -which was never mentioned as a liability in past tax returns. Sounds like fiduciary ignorance to me.

   It is MOST CERTAINLY our job to “spat negatives” when the system fails. If not us, then who? I know dozens of employees at large corporation here who bemoan the coercive pledge campaigns run at their workplace. They can’t dissent internally or publicly for fear (real or imagined) of their jobs. The newspaper is reluctant to get too aggressive in the matter since they themselves are participants. If you agree that the system needs improvement, then you have to support people who vocalize objection to the ivory tower status quo.

   Finally, I wish I could say that this abuse is unique to our UW chapter. If you google around, you’ll see UW making the news many times over the years for wanton spending (Atlanta) and unsavory executive conduct (D.C.). These events are particularly poignant in an era where direct giving is at least as easy as workplace giving, making it difficult to understand why UW is even needed.

   — Steve Hofstatter    Jun 30, 10:46 AM    #

8. Everybody talks about the coerced giving culture that accompanies United Way campaigns, but nobody does anything about it. Until now. Visit www.theuntiedway.org. No, “untied” is NOT a typo.

   — The Untied Way    Jun 30, 02:05 PM    #

9. Steve, I thought I gave long responses. Yes, there is a lot to chew on here, especially with the work place political involvement. I appreciate your response therein and concede this point. The politics of work place giving in your area does indeed appear very relevant given your additional explanation.

   I still believe that the compensation for non-profits must come much closer to mirroring the private sector, not only for the Exec’s but also for the staff. Right now, here in Silicon Valley, there is a push for individuals to major in non-profit majors. Charities/non-profits are looking more and more to the young educated, prime-time in their career, talent. These workers will not venture in the non-profit arena without compensation somewhat closer to the private sector. That may mark the current generation(s) character in a negative fashion, nonetheless they want to approach their peak earning dollar for themselves and their families (or soon to be families). Non-profit type salaries, I believe, should change, yet herein is found a dilemma. You say the ‘best non-profit execs are in it for the passion of making a difference.’ Maybe 1 1/2 decades ago, but not with the 25 to 45 year olds of today. I really do not disagree that one should be involved with non-profits/charities due to one’s passion, that will be a motivating factor, but people want both now, passion and compensation. It seems that the semi or fully retired CEO will offer their talent at less than the equivalent of what they can obtain in the private sector. But, to obtain, relatively speaking, young private sector talent to be focused with non-profits, then you’ll have to start more and more paying private sector type compensation. Orgs like Dorfman’s are available but in the end, their advisement, as good or as right that it may be, is just that, ‘their’ opinion. This statement is not to lesson their efforts and meaningful work, but it is to state what I think is a reality. With their research (that may be better than others), is still their opinion in the end. They are people just like you and me etc…

   If there was no turn-around or large increase during Ms. King’s last year then I think the board should be called on the carpet. With regard to executive managerial talent that can do spectacular things, was meant to express that in my believe, over the past decades, charitable orgs have had passionate people that work very hard, but lack the managerial talent that is found in the private sector. And, of course it is found in the private sector as that is where someone can better have the opportunity to maximize their earning power. That said, I completely agree with your statement, “There seems no better measure of leadership than to be a good steward of donor contributions, and UW Charlotte is losing ground on this count.” Well said.

   I am not an advocate of UW. I am an advocate of people not griping due to the success of others. I am an advocate of people working hard and being a talent that is head-hunted for, yet keeping the character to accept less than what one can obtain in the private sector and growing a non-profit or charity. I find in almost all situations that people at large will simply blame or point the finger at others instead of making a difference themselves. Yes to all your questions in paragraph 5, with the exception of the first sentence, which I just addressed.

   Not withstanding your examples, I think the point of this type of discussion falls in your statement that, “Donor revenue holds a very special status in my mind, and every expense of a charitable non-profit should be considered with sincere gravitas.” I agree whole heartedly, yet we differ where I would support compensations for all levels of employment to be closer to private sector. So long as value of contribution to the org can be demonstrated. If it cannot then there needs to be a change in management and on the board level (in my opinion).

   Regarding your claim of the board’s fiduciary ignorance, given in light of your paragraph 8&9, I completely agree and I would support any action therein to investigate.

   I only concede that it is our job to spat negatives if those spatting negatives are also ready and willing to do something about it. Otherwise we are in a situation like so many are when they complain about a U.S. president, etc, but then you find out that they don’t vote. I respect opposing views to mine if people vote, but I do not respect opposing views if they do not vote, or in this situation, if they are not willing to do something about it. My point is, most people are more than willing to complain, but seldom willing to do something about it. This forum is a form of doing something about it, so I must respect all comments of others herein. I apologize to all when sounding curt.

   — Tyler    Jun 30, 04:45 PM    #

10. Tyler, I’m admittedly long-winded on issues of passion. This one has irked me for years.

    There was a time that UW likely provided an important service – vetting out small community orgs in need of funding. But these days, with every org posting a web site, with data providers like Charity Navigator and the Chronicle of Philanthropy, with public information on tax returns a click or two away, and with other non-profit disclosure requirements, enlightened giving has never been easier or more assured.

    I conclude that we generally feel the same about most of this. I’ll challenge your notion that today’s youth has any less sense of benevolence or interest in giving themselves to a cause. This seems to be the keystone of your argument that non-profit execs should make what their peers in the private sector do. I’ll counter that younger ‘stars’ demand less because of their inexperience, and when they mellow with age in 20 years, they’ll have the passion I describe and NOT want to gouge their org.

    And yes, posting and “griping” on sites like this is doing something, albeit small. By being here, I gave you another perspective to the Charlotte debacle (contrast your first post to your last) — but more importantly, I just discovered what I was searching for all day — the link to a grassroots effort to change the UW status quo. Thank you Untied Way! I knew you were out there somewhere! I’m headed over to your site to make a donation right now… www.theuntiedway.org

    — Steve Hofstatter    Jun 30, 06:42 PM    #

11. Steve- Agreed, I think we share the overall same view. I hope you’re right with regard to the young ‘stars.’ I’ll check out www.theuntiedway.org. Thanks for the discussion. Best Always-

    — Tyler    Jun 30, 11:42 PM    #

12. I think what everybody is missing in this discussion is the basis on which her salary is determined. Her board claims that she has been uniquely successful in the Charlotte market, raising over $500 million in 14 years and increasing the number of member agencies. However, United Way of Central Carolinas is supposedly a Community Impact organization. That means she should have achieved demonstrable community outcomes during her tenure. The organization should be able to clearly articulate the social conditions that she has sought to improve and how United Way has contributed to their improvement. Instead, all we hear is how much money she raised. Further, there’s been little talk of how much of that money actually reaches the member agencies and how funding decisions are made. I think that United Way is a great organization but most of the credit should go to the dedicated staff and member agencies who are in the trenches every day trying to improve the community, not to one woman whose ego seems to drive every decision she makes. As a Charlotte resident, I’m extremely concerned about the impact this will have on the fundraising efforts of UW this year and in years to come. I think it was short-sighted of the board to not see the ramifications of the decision they made. Maybe it’s time they get out of the board room and actually volunteer at some of the agencies supported by United Way. It’s time for a leadership change Charlotte!

    — Concened Donor    Jul 2, 07:24 AM    #

13. Many verbose responses with way more knowledge and insight than me; however, the article did stimulate me to stop my employer urged donations to United Way and now I will focus my charitable giving directly to the organization of interest.

    — Wes    Jul 2, 02:07 PM    #

Commenting is closed for this article.

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