Sources, Sources...

I am not always popular in my online classroom environment (I know, you are shocked, right?). Right now, I am reallllllllly not popular. My professor and classmates are castigating large non-profit organizations, and they all agree they are evil. Everyone but me.

Thay are quoting sources stating that CEOs are being paid these huge salaries, and that fundraisers are being given incentives. They all seem to believe that the employees should work for free, and ignore that even school-children are given incentives for fundraising. The following is my reply, and feedback is welcomed:


Re: WK 6 DQ 1

Professor and Class,

What is a non-profit organization? Usually it is an organization that has sought, and been granted, tax-exemption status by proving to be legally able to meet the set requirements. It is "an incorporated organization which exists for educational or charitable reasons, and from which its shareholders or trustees do not benefit financially. Any money earned must be retained by the organization, and used for its own expenses, operations, and programs (Investor Words, n.d.)."

Now, in reading the posts in this thread, it sounds as though some of these organizations may be guilty of adhering to the letter, but not the spirit, of the law. Although, having benefited personally in the past as a military wife from the Red Cross and as a Girl Scout leader from the United Way, I am not so sure that the ends do not justify the means. This is a hard world to gather charity from, and competition is the ruling force in a capitalistic society...

At any rate, it seems the major concern here seems to be with the salaries made by the organization's CEOs. I was surprised by the salary quoted by a previous student: "the CEO of the Red Cross pulled down a $651,957 salary in the fiscal year 2003. $450,000 is listed as the base salary."

I read the financial statements for 2008, where $1,394,034 was listed as the total salaries paid in 2008 by the Red Cross (2009). If the CEO's salary is truly that high, how are the other 34,000 employees paid?

If I subtract $651,957 from $1,384,034, I am left with $742,077. For 34,000 people? Some of whom must actually receive a living wage….so the others get, what? $12,000 per year? Doubtful. My family struggles on a much higher amount of income.

So, I looked up the reported Red Cross CEO’s salary for 2008 on the Better Business Bureau’s Web site (n.d.), and found the following information:

Chief Executive : Gail J. McGovern, President and CEO
Compensation*:
$47,005

Staff Size: 34,000

I think that salary is more than reasonable; in fact, I am certain $47,005 is much lower than Ms. McGovern could receive in the for-profit sector. At some point, even a non-profit has to realize that they get what they pay for; and if salaries for their employees do not reasonably compensate, they will not attract the best and brightest to lead their cause.

Maybe sources are the problem? I am inclined to trust the organization's audited financial statements and the Better Business Bureau.

Comments are welcome.

Sincerely,

Meircee Boulahroud
MBA Student
Sacramento, CA (PST)


References:

American Red Cross. (2009). American Red Cross FY09 financial results. Retrieved February 13, 2010 from http://www.redcross.org/www-files/Documents/pdf/corppubs/FY09FinancialStatement.pdf

Better Business Bureau. (n.d.). Charity reports index. Retrieved February 19, 2010, from http://www.bbb.org/charity-reviews/national/human-services/american-red-cross-in-washington-dc-679

Investor Words. (n.d.). Online dictionary. Retrieved February 19, 2010, from http://www.investorwords.com/3331/non_profit_organization.html