A new Chronicle analysis of the salaries of more than 10,000 nonprofit employees and other officials who make at least at $150,000 finds that people who work at hospitals and private colleges far out-earn their peers in other nonprofit categories.
The data, gathered from 860 organizations that raise at least $35 million a year from private sources comes from the most recent available informational tax forms that nonprofits must file with the Internal Revenue Service. (See all the salaries in our searchable database.)
The tax agency requires nonprofits to disclose salary information for all employees paid more than $150,000 annually, as well as certain other “key” employees — such as former staff members who still receive paychecks and anyone who has significant oversight over an organization, such as board members, and who make $100,000 to $150,000. The IRS uses this data, at least in theory, to scrutinize excessive compensation and sweetheart deals awarded to nonprofit executives, board members, or other insiders. Such nonprofits can be subject to penalties.
Nonprofits must do more than list salaries: They must reveal how overall compensation packages are composed for each employee, including breakouts for base pay, fringe benefits, deferred compensation, and more.
The Chronicle collected data for all nonprofits that raise at least $35 million from private sources — individuals, corporations, and foundations.
Nonprofit pay levels have increasingly drawn concern from policy makers and others. In the tax law passed at the end of 2017, Congress approved a provision that levied a 21 percent tax on nonprofits that pay workers more than $1 million. The Chronicle has identified 226 organizations that pay employees that much.
The Million-Dollar Club
In the Chronicle study, nonprofits reported average annual compensation of $492,180 per key employee. But that’s an average heavily skewed by top-dollar employees working at hospitals and medical centers as well as at private colleges and universities.
Key employees at hospitals and medical centers — many of whom are doctors who run private practices as part of their employment arrangements — earned an average annual pay of $750,550, roughly 52 percent more than the overall average. Key employees working at private colleges and universities earn annual compensation of $696,730, on average, 41 percent larger than average across all key employees and 84 percent larger than their peers at public colleges and universities, who earn an average of $377,970 a year. Many of those employees are either doctors at university medical schools, investment managers, football coaches, or others who command high pay packages.
Nonprofit experts say those kinds of high-dollar salaries at hospitals and medical centers aren’t unusual because those kinds of nonprofits have to compete with for-profit institutions for talent and expertise. Nearly 20 percent of key employees working at nonprofit hospitals and medical centers earn more than $1 million a year, the largest share of million-dollar pay packages among our causes.
Most important, compensation at nonprofit hospitals and medical centers is heavily influenced by lucrative practice agreements under which some doctors work.
“That’s why the medical centers are really an outlier,” said James Finkelstien, professor emeritus of public policy at George Mason University’s Schar School of Policy and Government. “They’re in a practice plan. A lot of their compensation is going to be determined in their practice plan, and the practice plans are often very lucrative.”
Private Colleges
Private colleges and universities also have an abundance of key employees who earn more than $1 million — 18 percent of all key employees earn that much, the second-largest share among all causes.
Compare that to their peers at public colleges and universities, of whom only 5 percent take home pay of more than $1 million.
For instance, private colleges and universities in our database list 78 individuals with a “medical doctor” honorific. They earn an average of $1.9 million a year. If you take them out of the equation, average pay for key employees at private colleges and universities drops from $696,730 to $641,928.
That average is probably in part because private colleges and universities also list 69 individuals with the word “coach” in their titles, mostly men’s football and basketball coaches. On average, they earn $1.8 million. If you remove them from the analysis, average annual pay drops from $696,730 to $650,120.
College Presidents and CEOs
A similar trend is at play for CEO compensation, though there’s a slight reordering at the top. Private colleges and universities pay an average of $1.8 million to individuals with “CEO” in their title, followed by hospitals and medical centers, who pay chief executives an average of $1.7 million.
However, many college top executives don’t go by CEO — our database includes only 28 with that title. Our database has 100 private higher-education presidents earning an average compensation of $991,570 per year.
At the bottom of the key employee pay scale are United Ways, community foundations, and religious groups. Each is nearly in a dead heat for the smallest average key employee compensation, with United Ways reporting $235,960 a year, community foundations $234,340, and religious organizations $232,671.
Community foundations, religious organizations, and social-service groups reported the smallest average CEO compensation. Average annual pay for key employees with “CEO” in their titles stood at $376,350 at community foundations, $370,320 at religious groups, and $300,370 at social-service organizations.
