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Exec's Salary Becomes A Funding Problem

By Mark Hrywna - September 1, 2009

There was no shortage of cuts when the Montgomery County, Md., budget was adopted this past May, but in a $4.4-billion budget, $55,000 sure did get a lot of attention. Among the budget cuts was $55,000 initially proposed for Food & Friends. The Washington, D.C.-based organization, which provides specialized meals and nutrition counseling to people living with HIV/AIDS and other life-challenging illnesses, had received county funding for nearly a decade.

The $357,447 salary of Food & Friends Executive Director Craig Shniderman caught the attention of Montgomery County Councilman George Leventhal during the discretionary grant application process. New to this year’s applications was the inclusion of the executive director’s salary. Food & Friends, which had $7.6 million in revenue during 2007, sought $20,000 as a grant. Leventhal said only a few applications had salaries surpassing $200,000, much less $300,000.

When County Executive Isiah Leggett proposed $20,000 of the nonprofit’s $55,000 service contract as a part of the county’s base budget, Leventhal said he expressed his concern and had recommended the service contract be eliminated. The committee, and ultimately the council, also complied in passing the budget unanimously.

"I’m not on a crusade to criticize nonprofits in general, or strike fear into nonprofit service providers. This one was very much the outlier," Leventhal said. "No organization is entitled to funding. This one organization was very much in excess of every other organization," he said. County staff estimated that within the county’s $3.8-billion budget last year, more than $91 million in service contracts were awarded to about 250 nonprofits, the majority of which are health and human services related.

Council members earn $94,040 annually representing Montgomery County, which has almost one million people and includes the Washington, D.C., suburbs of Rockville and Bethesda.

Executives at Food & Friends dispute the notion that it is far in excess of other nonprofits funded by the county, pointing to other nonprofits that will receive service contracts, namely the Jewish Federation of Greater Washington, D.C., where the director earns more than $400,000. But the organization also was concerned about the process by which funding was eliminated.

"It’s puzzling why we were left out," said Mike Bento, who is assisting Food & Friends with strategic communication in the wake of the funding decision. "It doesn’t seem like there was much of a process," said Bento. "To go after our $55,000 – which is less than one-tenth of 1 percent — we feel like we got singled out inappropriately."

In a letter to Council President Phil Andrews, board President Robert Hall wrote he was "troubled that the issue of compensation was not disclosed early in the process. At no time were we informed of the criteria for ‘acceptable’ compensation. There was no objective process undertaken by Mr. Leventhal in reaching his personal conclusion that our director’s compensation is not suitable."

Maryland might be the front line for the issue of executive compensation at nonprofits as representatives from state associations around the country could not recall a situation where government withheld funding because of what might be considered too high a salary.

As for how Shniderman’s compensation was determined, Hall said the board established a compensation committee and retained New York-based James E. Rocco Associates in 2004 and 2008. "How much did that cost them? It doesn’t appear to me they’re being wise stewards of their administrative overhead," Leventhal said. The nonprofit’s 4-star rating from Charity Navigator didn’t sway him either.

Rocco Associates undertook an executive compensation study to determine a fair and competitive executive compensation program, using data from 10 published not-for-profit compensation surveys, three published for-profit compensation surveys and many organizations’ federal Form 990s, according to Hall.

The firm also interviewed Shniderman and select board leaders and reviewed Shniderman’s performance evaluations before recommending "an appropriate and highly-competitive executive compensation program for an executive of his tenure, credentials and accomplishments," Hall told The NonProfit Times via an e-mail. An agreement was reviewed by the Board’s executive committee and ratified by the board of directors.

Food & Friends also retained Rocco Associates in 2007 to review the staff compensation program for all job categories, and adjustments were made in certain job categories to make positions highly competitive with the market, said Hall.

"Food & Friends is committed to recruiting and retaining highly competent staff," said Hall, adding that more than 40 percent of staff have been with the organization more than five years and nearly 20 percent in excess of 10 years.

Among Sniderman’s accomplishments, Hall cited the organization’s annual budget growth, number of clients served and number of volunteers over the years. "The goal of establishing Mr. Shniderman’s compensation program is to retain exceptional leadership," said Hall, adding that he has more than 35 years experience in nonprofits, many at the executive level.

Shniderman is under contract through 2013 that stipulates an annual increase of 4 percent. As part of the board and staff effort to curtail expenses and maximize the impact of available funding this year, Hall said Shniderman voluntarily forfeited a cost of living increase, retirement contribution, and 10 percent of total compensation for 2009. Food & Friends employs 51 full-time staff members, according to Hall, and during the past 18 months reduced that from 58 through attrition. The number of volunteers, he said, has increased from 3,500 in 2005 to 13,000 last year.

Hall said setting compensation is complex and must take into account factors, such as: performance; length of service; years of professional experience; professional education and credentials; specific duties, including fundraising; size of budget; number of paid and volunteer personnel; geographic region served; volume of service and other factors. He said those were all taken into consideration and added that it’s "not appropriate to consider only local organizations in setting compensation."

According to the 2009 NPT Salary Survey, published this past February, the average salary of an executive director was almost $115,000 last year. Among nonprofits with budgets between $1 million and $10 million, the average salary was $120,500. For nonprofits in the Mid-Atlantic region, which includes Maryland and Washington, D.C., the survey indicated an average of $111,675. Among social/welfare groups, the average salary was $118,307. NPT

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