High salary charity CEOs

[Guest]

A lot of people criticise charities for paying CEOs large salaries.

Now my knowledge of this is abit shaky but as far as I am aware CEOs arent owners. They dont own the company. They are employed by an owner or owners? 

Now that is potentially a huge difference. The reason is that the person or persons who set the charity up have to try to get the best people in to generate the most money.  So even if you think it is unethical to pay a CEO a 6 figure salary. It may be necessary for the charity to do it to generate the most money possible for the charity?

 Now the other issue is the issue of profit. Now I've looked into this bit a bit unsure. There is a difference between not for profit and non profit. Charities are non profit but not for profit. As far as I am aware charities are not allowed to make profit for themselves. They are allowed to make profit but it has to go back into the charity?

 

[Guest]

@nudge I'm gonna tag you because you know everything an no one else seems interested 

[nudge+]

If it's a big successful organisation that generates a lot of money for a cause that benefits society, I don't see how that's a problem. To get the best people, you have to offer competitive salaries; it's as simple as that. As long as a non-profit organisation is not fraudulent and doesn't use its status to benefit themselves primarily, I don't see why people working for it shouldn't be compensated fairly.

[Guest]

34 minutes ago, nudge said:

If it's a big successful organisation that generates a lot of money for a cause that benefits society, I don't see how that's a problem. To get the best people, you have to offer competitive salaries; it's as simple as that. As long as a non-profit organisation is not fraudulent and doesn't use its status to benefit themselves primarily, I don't see why people working for it shouldn't be compensated fairly.

The argument could be used that the CEOs are taking money out the charity and if they weren't paid so much then the  charity could spend more. I mean CEOs are generating millions of pounds for charities. A 6 figure salary doesn't seem like it would make much difference but ten of thousands or pounds a year actually would when it comes to charity.  Like I said I think its necessary to pay CEOs this because if they dont offer it they would generate less money because they wouldn't have such good CEOs.  However there is a moral issue of whether the CEOs should work for less money because it is a charity?

Was the stuff I stated in my previous statement factually correct?

[Dr. Gonzo]

CEOs aren't always owners - but they can be. It depends on how the company is structured, how shareholders have voted for a Board of Directors, and how the board of directors votes for it's company's officers (that's a heavily simplified breakdown of that works). If a CEO is a majority shareholder, chances are they've voted themselves onto the board, and chances are they've gotten the board to vote them as CEO.

Honestly, it depends on: what the charity does, how much money do they generally bring in on average per quarter/year, and what they spend that money on.

• Should a charity that gets a shitload of money for a good cause, but then spends 85% of what it brings in on marketing (to get more donations) and less than 10% on the cause it's supporting pay its CEO (or any other officers/board members - because board members are usually paid as well, although they aren't always) a 6 figure salary?
  • I'd argue that that's probably unethical because they're collecting a shitload of money but the vast majority of that money isn't going towards what people think their money is going to support.
• Should a charity that gets a shitload of money and spends 40% or more on the cause it's meant to support and spends 20-30% on marketing get paid a 6 figure salary?
  • Probably! If you're getting a shitload of money and spending a large chunk of that cash on what people making donations believe they are donating for... then they're probably doing a very good job as a charity.
  • Like @nudge said - to get the best people, you have to pay competitive salaries.
    • Some non-profits rely on volunteer work, but pretty much every non-profit in the world relies on paid employees. It's just a general concept with employment: getting good workers requires paying a good salary.

So for me, how ethical it is that a CEO is paid a lot from a charity... it all really depends on the underlying facts. I don't think you can make a blanket statement that all CEOs of non-profits making above a certain amount are unethical. I do think many charities spend far too little of the money they collect from donations on the actual causes they support and spend far too much on marketing - but that's not all charities.

With for profit v. non-profit... I think there's a big misconception that a non-profit charity can't make any profit. Non-profits can make a profit... in fact, they should try to make a profit. Without making a profit, they can't build up reserve funds, and that makes them not sustainable. 

A for profit corporation can take the profits they made and pay them out to private individuals (like dividends for shareholders, for example). A non-profit isn't meant to do that - but they can keep reserve funds for the future and they can pay reasonable compensation to employees.

[nudge+]

22 hours ago, Gunnersauraus said:

The argument could be used that the CEOs are taking money out the charity and if they weren't paid so much then the  charity could spend more. I mean CEOs are generating millions of pounds for charities. A 6 figure salary doesn't seem like it would make much difference but ten of thousands or pounds a year actually would when it comes to charity.  Like I said I think its necessary to pay CEOs this because if they dont offer it they would generate less money because they wouldn't have such good CEOs.  However there is a moral issue of whether the CEOs should work for less money because it is a charity?

Was the stuff I stated in my previous statement factually correct?

Sorry, I read this last night before I fell asleep and then forgot to reply... But @Dr. Gonzo did a great job and covered it all anyway

[Harry]

A charity with a high cost base ultimately doesn't get my money tbh. 

[nudge+]

I support two non-profits, a small one and a rather large one. Over 80% of both their operating expenses go directly into their programs. Admin costs of the large one are 10%, of the small one it's only 5%. So even if the CEO of the large one probably gets a handsome salary, I don't care - they are obviously doing a great job for the cause.

[Mel81x+]

If whoever you support/endorse isn't getting what your money is supposed to do it doesn't matter whether they are paying the face of their cause X or X times 100 its just a bad business model that isn't really doing what you want it to do. With charities its easier to paint a red circle because that word charity in itself is misconstrued by people reading into what it means literally vs how the businesses that do these things have to operate.