our boss’s high salary is tanking morale

by Alison Green on April 19, 2021

A reader writes:

This is an odd question in that I think I know what I’m going to do (dodge it and run — I am a nervous creature) but I’m wondering if that’s ethically what I should do. The scenario is this: I work on a five person team for a nonprofit. It’s the executive director and four primarily self-directed employees. One of the other four non-directors and I both took our jobs just before the pandemic at well below market rates. In my case, I’m paid about half of what I should be for my experience, the breadth of the job responsibilities, and my impact on revenues. This was fine: the shutdown was looming when I took the job. Any port in a storm, etc. Now that hiring is picking back up again, we both landed other jobs elsewhere at fair pay and as such are unfortunately both resigning one on the heels of the other.

I mentioned feeling bad about this to one of the coworkers who’s staying … which is when I found out something shocking: our ED pays himself over double the market rate for his position in our city. Everyone else on staff makes below market rate for their own roles. Plus, his salary was over a third of our entire operating budget this past year, when fundraising was impossible and we were putting important expenses on hold due to the pandemic. This is now known to everyone on staff because the other departing employee looked it up in our publicly available tax filing.

People are angry. I am too, but I’m also out the door. I know if I were staying, though, it would be impossible to deal with the rather stringent austerity measures he puts in place knowing that if he cut his salary to something approaching the norm in our city we’d all be paid more fairly and the people our nonprofit serves would benefit as well. We are a very small team with a very small budget. His salary is large enough to live well in a city at a much higher cost of living than our own.

I have two questions. First: given that the people who are staying cannot say anything without making their working lives awkward or untenable, do I have a responsibility to say something in my exit interview? My answers go to him but also to the board of directors. It feels safer to mention that I think they ought to pay more for my role in the future and leave it at that. I’d like to leave on good terms. But part of me wonders if the least I can do for the two who are staying is to let the ED know that he needs to explain himself if he wants to regain their trust.

And second: prior to learning this information, I was all set to enthusiastically try to find them a replacement for my position. I was going to first suggest strongly that they pay better, but in either case I thought it’s a good enough job with good people and I’d like to see them find a good fit. Now I feel uncomfortable enough that I’m not sure if I can recommend them as an employer. Am I overreacting? My inclination now is to help them write the job description, but not put out any feelers to my network or otherwise endorse the job.

I don’t always agree when people complain about ED pay, because even what feels “high” for a nonprofit can be very low compared to what that person would make for their skills in the private sector, and you often need to pay very competitively for talent for those roles (roles which can be immensely demanding). There’s sometimes an ethos in the nonprofit sector that people shouldn’t be working there for the money, and I don’t agree with that at all; I think everyone should be compensated fairly for their labor, including those running the organization.

But this is not that.

This is more than double the market rate for his position in your city, while everyone else makes below market. This is a third of the organization’s operating budget. During budget cuts. In an organization already struggling to pay its expenses, this is a salary “large enough to live well in a city at a much higher cost of living than our own.”

So no, I don’t think you’re overreacting to have a problem with this. Your ED is underpaying staff while overpaying himself and shortchanging the people the organization serves. That’s bad stewardship of the organization and its mission. It’s both incompetent (because he’s in charge of allocating the organization’s resources effectively) and ethically icky.

It’s reasonable for you to decide you’re not comfortable recommending the organization to potential replacements when you have serious concerns about its leadership.

As for whether you have a responsibility to say something in your exit interview … I don’t think you ever have a responsibility to raise anything in an exit interview. You’re not obligated to raise uncomfortable truths that could jeopardize things that are important to you (whether it’s relationships or future references) just to provide free consulting to an organization you’ve already decide to leave (particularly when there are other ways for them to receive feedback from staff if they really care to). I respect people who choose to provide that input anyway, but you’re never obligated to do it.

In your case, you’re motivated by wanting to help the colleagues who are staying and probably the organization itself, separate from the ED. But those colleagues are able to advocate for themselves if they want to; addressing publicly available information about the ED’s salary is not so sensitive that it can only be done by someone who is leaving.

That said, if you want to raise it, do! It’s useful for organizations to hear pushback on this kind of thing. You’d be doing a good deed by telling them how it’s landing — and there is a greater public good here because it’s a nonprofit, in a way there wouldn’t be with a private business. But it’s not on you to be the one to deliver that message or fix the situation if you’d rather just make a clean break.

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{ 219 comments }

{ 219 comments… read them below }

    1. ThatGirl*

      If they only have 4 non-director employees, that doesn’t leave a lot of room to be anonymous.

      1. PT*

        The Form 99o (in the US, an IRS document that must be made publicly available) wouldn’t be anonymous, either. It lists the names and salaries of a nonprofit’s top 25 highest compensated employees. The nonprofit has five total employees. Any savvy person looking to join and negotiate a salary package would Google its form 990 and be able to see every employee’s pay rate.

        So in a Glassdoor review, you could write, “Check out the Form 990 before negotiating your salary,” and not say why.

        1. L.H. Puttgrass*

          Form 990 only requires reporting compensation for “officers, directors, trustees, key employees, and highest compensated employees.” Only the top five highest-paid employees need to be reported, and only if they received over $100,000 of reportable compensation. Anyone who receives more than $150,000 has to be reported as a “key employee.”

          I doubt that anyone other than the ED in the LW’s organization meets that definition (and if they do, the ED is getting really obscenely overpaid).

          (Source: Form 990 instructions.)

          1. Starbuck*

            Yeah, I just looked up my non-profit org of ~15 staff, and only the executive director’s exact pay is listed (it’s under $100k). None of the other staff salaries are included.

    2. Reba*

      Given the tiny size of the team, it would hardly be anonymous, right?

      I’m in favor of telling in the exit interview (it’s not clear from the letter who would be conducting it — I can certainly understand how it would be hard to say this to the ED’s face!).

      It could be wrapped up in OP’s discussion of their own pay issue. “Hiring and morale are affected by low staff pay; another factor there is the unusually high executive pay, which is publicly viewable, and I would be concerned that it could affect our reputation and effectiveness.”

      Like, I don’t think you need to get into all the reasons it’s bad, as Alison did here. You can just flag it and keep moving.

    3. TWW*

      Anonymous tip to local newspaper.

      Apparently salaries at this org are publicly accessible, but no one has been paying attention? Sounds like the sort of thing a reporter could investigate without having to out OP as the source of the information.

      “1/3 of Local Non-profits Operation Budget Goes to Director Salary” would make a juicy headline

      1. BRR*

        The highest compensated employees, with certain criteria, have their salary listed on a nonprofit’s form 990, which are public for all nonprofits except for religious organizations. (I hope that didn’t sound too obnoxious,/know it all, this is related to what I do).

        1. Tuesday*

          On the contrary, I found it interesting and appreciated the info! I didn’t know how this worked.

        2. Amaranth*

          I’d be curious how they are rated by something like CharityWatch, but you’re right, the info is out there for donors who do due diligence. When I first started working for nonprofits I assumed they were monitored/restricted a lot more closely than they actually are.

      2. ThatGirl*

        I don’t mean to sound like Debbie Downer, but most local newspapers are seriously understaffed and I’m not sure this really rises to the level of a huge scandal. It’s frustrating, for sure, but most local media wouldn’t report on this sort of thing because … okay, the director is overpaid, the staff are underpaid, but what’s the news angle? (I have worked at three small-ish dailies of various circulation sizes; the biggest one might have had someone do some digging into the org’s finances, but that doesn’t mean they would have found much to hang a story on.)

        1. Smithy*

          Yeah…..I mean, if you think of what’s happening with the NRA right now, so much of why it’s newsworthy is more to do with the size of the org and the amount of money at play. If this is a $2M organization paying it’s ED over $600k….that’s likely far too much. But….it’s not taking organization funds to go a on a shopping trip along Rodeo Drive.

            1. MassMatt*

              I’m unsure from the letter whether it’s a charity with only 5 employees total or the LW is part of a 5-person team in a larger organization. The smaller the size of the organization, I suppose the less likely a newspaper would be interested, but on the other hand the smaller the organization the more egregious and indefensible the large salary. It’s hard to justify an Exxon/General Motors size salary for a charity the equivalent size of a mom-and-pop business.

              Honestly having a formal BOD seems like overkill if there are only 5 employees total. Didn’t Swift have an army with many generals and one private somewhere in Gulliver’s Travels?

              1. Qwerty*

                It’s from one of the Oz books by L Frank Baum! (I want to say “Ozma of Oz” but they sort of blur together)

                I am curious how many people are on the board. Is the board bigger than the rest of the organization? If the ED’s salary is a third of the budget, what percentage does the rest of the salaries take up? Do they even have enough money left over to do much good in the community?

              2. pleaset cheap rolls*

                “Honestly having a formal BOD seems like overkill if there are only 5 employees total. ”

                No, it’s very important. it need not meet a often, but having independent non-paid directors is very important to having an effective organization, and to oversee the chief executive.

              3. Claire*

                Boards of directors are a legal requirement for nonprofits. That is who hires/fires the Executive Director and the board has fiduciary responsibility for the organization.

              4. MissBliss*

                Not only is having a board of directors required for non-profits, smaller organizations like the one described often have working boards, who fulfill some of the roles that staff members fill in larger organizations.

      3. Retro*

        I think this would end up hurting donations to the non-profit more than the director’s salary. I would react instinctively that “Oh I shouldn’t donate to that organization because they don’t use their resources wisely. If the director is paid exorbitantly, then where else are they using the money on luxuries rather than needs?”

        1. DJ Abbott*

          That would be a natural consequence of what they’re doing. They probably won’t stop until there are consequences. If they continue to overpay the director and short-change everyone else, they’ll probably go downhill whether this happens or not.

        2. Artemesia*

          I have never given to the Red Cross again since Liddy Dole was given the leadership as a sinecure. And no one I know gives to Susan Komen since we learned that it provides lavish salaries and perks to her founder sister and other cronies. Lots of charities exist primarily to give salaries and perks to their founders or executives — a children’s charity in my former home town had the husband/wife founder, their children and sons and daughters in law all on the payroll with 6 figure incomes and spent virtually nothing on ‘the children’. So yeah, blowing the whistle on this is likely to tank donations and the organization which may actually be a good thing.

        4. Observer*

          I think this would end up hurting donations to the non-profit more than the director’s salary. I would react instinctively that “Oh I shouldn’t donate to that organization because they don’t use their resources wisely. If the director is paid exorbitantly, then where else are they using the money on luxuries rather than needs?”

          And?

          I’m not sure that’s a bad thing. Money is not infinite and people should try to give their money in places where it will actually have impact. That doesn’t mean ridiculous ideas like refusing to give money to a charity if you see that some of their employees are well dressed (as actually came up in a different letter.) But that DOES mean that unless there is a REALLY compelling reason, an ED should be be making well above market rate at the same time that the organization is claiming to be taking austerity measures.

          This goes several times over if the organization is not totally unique in the service they provide.

      4. DJ Abbott*

        I worked for a large organization that was technically non-profit, but more like a corporation.
        Morale had already been going down because they were pinching pennies and centralizing departments that had been happily and productively distributed, forcing the employees to either quit or make long commutes to far-away suburbs. This was long before the pandemic.
        After a few years of that the CEO’s pay + bonus made headlines for being egregiously large… at a non-profit company.
        After that morale was *really* bad. It didn’t help when they started eliminating administrative staff positions. I was eliminated in the 2nd round, just before the pandemic.
        Penny-wise, pound foolish and executive greed will one day catch up to them, if if hasn’t already. There should not be any hand-wringing over this. It’s a natural consequence and they have it coming. They’ll either turn it around, or be acquired by another organization. Either way they’ll keep going.

        I think the point I’m trying to make is, protecting an organization from consequences makes it worse in the long run.

      5. JR*

        There are circumstances where having 1/3 of the budget go to the ED is reasonable. This certainly doesn’t sound like one of them – since they are presumably other expenses besides staff salaries, it’s likely that the ED is making about as much as the other four employees added together, or close to it, and it’s unlikely that’s reasonable (especially with the context the LW provides about local salaries).

        However, think about an organization with 1-2 employees, where the vast majority of the value-add is generated by the staff’s work. For instance, let’s say the organization provides consulting services to other nonprofits, or is a research organization – besides rent, tech, and insurance, maybe some printing and marketing, etc., salary is and should be the major expense of the organization, so with a small staff, that’s a large percent of the budget. The problem is that the ED is overpaid relative to local peers, and even more so that the rest of the staff is underpaid, but the proportion of budget going to the ED isn’t inherently wrong.

      6. raincoaster*

        As a reporter, I can tell you it very much depends on the local paper. Some are pro-executive no matter what, and some are scrappy muckrakers who would love to get this kind of story. Take it somewhere you know it will be welcomed, and make your first approach via an anonymous tipline or a brand new email that doesn’t trace back to you. If you connect with someone interested, you can arrange to meet or share bona fides in a second conversation.

    4. Hey Nonnie*

      Does OP have a good relationship with any member of the board? It might be easier to have a non-formal conversation with that person about publicly-available information, optics (especially to donors, which the board would/should care more about), and staff morale.

      Something that’s more “off the record” than a formal exit interview would be.

      1. Cara*

        This would be the would be the way to go. Even without an established relationship with a board member, contacting one of them to give a heads up about the bad optics and staff morale would be doing the organization a service.

  2. AnonForThis*

    Wow. I work for a not-for-profit hospital and at the start of the pandemic, our C-suite and upper management announced to the staff the significant pay cuts they would be taking in hopes of holding off any staff cuts. It’s crazy that the ED would be that greed-motivated to not even give a little back, much less cut it down to a reasonable level for the city.

    1. CupcakeCounter*

      I worked for a for-profit and they CEO took a 25% pay cut right away, then her direct reports took a 15% cut next, and then on down as things kept going. I was laid off eventually but our “pay cut” was every other Friday unpaid and you were not only not expected to work, but you were strongly encouraged not to (and if you had to for some reason you were free to take a make up day for it). 90% pay = 90% work
      I believe the C-suite ended up eliminating all of their bonuses as well for 2 years.
      Production workers pay were never cut and in some cases they made more. Originally everyone was sent home with a minimum of 3 weeks full pay. A week later, some workers were allowed to return to work on specific projects that related to health care and government contracts. Those workers were paid double time as hazard pay.
      Really wish I still worked there…

      1. MassMatt*

        …This is what good leadership looks like! Upper management (nonprofit or not) should feel a great sense of responsibility to their employees, clients/customers, and shareholders/donors. Too often, they act as though the organization exists to serve them instead of the opposite.

        I worked at a health insurance company many years ago that went through rounds of layoffs and premium increases, they were getting public money also. There was a big scandal when the budget for redecorating the CEO’s office came out. It wasn’t a $20,000 wastebasket, but it was close.

      2. pleaset cheap rolls*

        My org hasn’t had pay cuts (we have reduced staff due to attrition and some grant-funded projects not continuing). But we have a plan to cut pay if we need to, with the highest cuts to people at the top of the scale, and no cuts at at all to about a quarter of our lowest paid staff.

    3. Boof*

      Yep, our academic medical center top decision makers took the biggest paycut, followed by reducing higher tier salaries (above $100K) by a percent, and reducing some of the retirement plan employer contributions (again, generally on the higher earners). And they regularly updated on when they could revert those changes back to pre-pandemic levels. No back filling but we’ve now stopped pretty much all the austerity measures.

  3. I'd Rather Be Eating Dumplings*

    Often people’s resentment over someone being ‘overpaid’ or something being ‘overpriced’ is really just misplaced anger that should be directed at all orgs who are under-paying and under-valuing labor.

    This doesn’t sound like that. I think you should say something if you feel able.

    1. Snarkus Aurelius*

      You’re not wrong, but this guy’s salary is a third of the entire budget. People are literally being paid less so he can be paid more, way more than is needed to live in that area.

      1. I'd Rather Be Eating Dumplings*

        Agreed; that’s why I said it doesn’t sound like that. I hope OP is comfortable speaking up.

      2. KateM*

        For me, it isn’t even that his salary is third of their budget. It is that he is paid twice the market rate while other employees are paid half the market rate. If everybody was paid double the market rate (or everybody half the market rate), and that rate just was such that this one executive gets third of budget, I’d be able to live with that.

  4. Joan Rivers*

    There are two options that may be controversial but I’ll mention them anyway.

    1) An anonymous letter to board members. Obviously, they may wonder if it’s from current staff, but it could say it’s from “former employees.” Or from “a source who discovered these facts.”

    2) Finding a newspaper / TV reporter who’d find this interesting, maybe in a piece they’re doing about unfair salaries.

    Tricky.

    1. Amaranth*

      If the Board doesn’t know how much the ED is paid then they are kind of beyond hope. Maybe pointing out that it is way beyond industry and area norms and is going to dissuade donors would wake up some of them but how could they not know?

      1. And they all rolled over*

        Surely the ED can’t just sign his own checks, right?
        Another angle, if anyone even glances at the budget, the ED’s salary would be in the top 3.

        It’s theoretically possible that the board isn’t aware of the market rate for ED’s work, but surely they must be aware of how much he is getting paid, right?

    2. merp*

      I was absolutely thinking of both of these. Tell the board, tell the press! It isn’t an easy thing to do but you have a new job – I feel like the risk would be worth it as an equity issue. But only you can decide that, OP.

    3. pleaset cheap rolls*

      If the board doesn’t know this they’re deeply incompetent. One of the key board roles is oversight of the chief executive, including on compensation.

      1. pleaset cheap rolls*

        Excuse me – unless they are negligent, they MUST already know the chief executive’s salary.

        They may not know the huge gap to the rest of the staff.

        1. Grizabella the Glamour Cat*

          Exactly.

          I would assume they do know the amount of the ED’s salary. But they may not know all of the context, including the fact that he’s paid more then double the market rate (!) while everyone else is paid below market rate (!!).

  5. Alton Brown's Evil Twin*

    Where has the board been this entire time? The ED doesn’t get to set his salary unilaterally.

    1. Threeve*

      I would try to get this information straight to the board. ED can maybe hear the concern that his employees are paid below market rate, but the odds of him operating in good faith when it comes to salary aren’t great, and the odds of him operating in good faith when it comes to his salary are pretty minuscule.

      This makes my blood boil.

    2. Lucy McGillicuddy*

      This is my thought too – boards usually approve salaries and budgets. (I wouldn’t depend on them to do much here.)

      1. DJ Abbott*

        Yes, the board is probably in the ED’s pocket. I don’t know if I’d bother with notifying them. If I did, I wouldn’t be surprised if they did nothing.

        1. In my shell*

          “the board is probably in the ED’s pocket”

          If they are then there is probably a good reason for it – if ED was a problem (not salary-wise, but performance/effectiveness-wise), then the Board wouldn’t be working in tandem with the ED (and approving that salary level).

          1. DJ Abbott*

            The ED may be the sweetest or most productive person in the world, but it’s still wrong to overpay him at the expense of the staff and mission.

          3. MsM*

            You’re presuming the Board isn’t just as much of a problem in their own right. If they’re all friends the ED recruited, or trust the ED’s reputation and expertise over their own, or are completely checked out, or don’t understand they have a fiduciary responsibility and don’t bother with that aspect of operations…basically, there are a lot of different ways for Boards to be dysfunctional. I’m guessing this one isn’t completely hopeless, or OP would just be trying to help their colleagues escape, but it’s hard to say whether they’re unaware or care just based on this.

          4. Observer*

            “the board is probably in the ED’s pocket”

            If they are then there is probably a good reason for it

            Not in this universe, no. There are so many reasons that Boards allow wildly inappropriate stuff to happen. Whether it’s incompetence, laziness, social connections or something else, it happens all the time.

          5. Legal Beagle*

            Uh, not in my experience. Plenty of non-profit boards are filled with cronies of the ED and oblivious rich people who don’t know or care what the staff is getting paid, or if the ED is even doing a good job.

          6. aebhel*

            My library had a similar experience with our previous director (it wasn’t THIS egregious, but it was along the same lines) and she got away with it because the board was distracted by other issues and pretty much just rubber-stamped her budgets for several years. It wasn’t until after she left and they had someone go back through them that they realized how egregious it was.

            A lot of boards, especially for small nonprofits, really don’t do their due diligence when it comes to supervising the ED.

        2. Depends*

          Based on my experience of nearly a lifetime in non-profits, that is my take.

          The board is either in the ED’s pocket or they Just. Do. Not Care.

          Over time, the passionate people who founded and led an organization leave due to death or other attrition. The board becomes full of people either picked because they will rubber stamp an ED and/or they are willing to donate significant amounts of money. Passionate people who do get on the board are an ineffective minority with no power.

          I just watched a large non-profit (over 75 years old) go into a death spiral last year after 5+ years of mismanagement by the ED and obscenely high ED salary. She had previously filled the boards with friends and family members of her friends. Critical staff were laid off and severe programmatic cuts were made, but she got raises to her very high salary annually. Unfortunately, she was able to blame Covid for the death spiral. Even though former staff contacted various news stations/newspapers, no reporter has tried to look into how such a huge organization with deep community impact fell “so fast.” It wasn’t fast, but no one is willing to look into it or take ownership. Especially the board.

    3. Smitten By Juneau*

      Definitely report this to the board. In theory they should be aware of the issue, but don’t understand the impact. It’s also possible that the board members are all buddies with the ED and are perfectly happy with this arrangement. Depending on where you live, you state agency that governs non-profit boards might be interested in stirring things up.

    4. Noncompliance Officer*

      This is my thought, too. I know non-profit boards range from hands on to only-exists-on-paper, but this is where I would start.

      1. Lizzo*

        Boards have a fiduciary responsibility to the organization.
        If the board isn’t concerned about that responsibility, perhaps funders (individual donors, corporate supporters, grantors) will be.

    5. BigTenProfessor*

      If there is a board member the OP knows well and trusts, I would start there — probably via phone/Zoom and not in writing.

    6. L.H. Puttgrass*

      Wouldn’t the board of directors already know (and probably have set) the ED’s salary? Or am I vastly overestimating a BoD’s role in overseeing a nonprofit?

      1. Dust Bunny*

        Our BoD has very little idea what we do. I work for the archives department and at least a few of them were under the impression that if there isn’t a researcher in, we have nothing to do. Not maintaining collections, not answering remote inquiries, not . . . etc.

        1. L.H. Puttgrass*

          Oh, I don’t doubt that a BoD wouldn’t have much awareness of what people do on a day-to-day basis. But setting (or at least approving) the ED’s salary seems like kind of a core BoD oversight function.

          1. Starbuck*

            Right, because otherwise who else would have the authority to set the ED’s salary? The ED? Maybe that is what happened and the board is just asleep at the wheel.

      2. Nonprofiteer*

        Theoretically and legally, the board does set the ED’s salary. The IRS nudges orgs toward good practices like compensation benchmarking, but it isn’t required.

        Unfortunately with small organizations, the boards tend to be friends of the ED, probably recruited by them, and less willing to do things like question their salary. Even more if the ED is also the founder and has some special tie to the mission, when they are seen as worthy of exceptional pay. Sometimes this happens when a founder earns little or nothing for the first stretch of time; the board sets a relatively high salary to make up for that. I think it’s a terrible practice for several reasons, but it happens.

        Also it’s possible the ED took a pay cut last year and didn’t say anything… Doesn’t sound likely!

    7. Smithy*

      If the Board is unaware of the ED’s salary – particularly when it’s a third of the organization’s budget, there are far more problematic things afoot.

      If I felt so moved to say anything – and as someone who’s only ever worked in nonprofits, I’m not sure I would – I’d take the effort to directly write the Board separate from my exit interview. It will still get back to the ED, but I’d want to make sure it was a concern more formally flagged to the Board than just as an exit interview. I’d also write the letter in a tone that implies that they are likely aware of the ED’s salary, and maybe even aware of other staff’s pay. Essentially to say “while you are likely well versed in our budget, I want to flag a key discrepancy that makes me uncomfortable.”

      The reason why I’d be reluctant to flag this to the Board…..is I’d be side-eying the Board as approving this. Maybe they’re under the impression that they’re actually paying everyone above market wage and are just wildly out of touch with wages of the day? Whatever reason they’re on this Board and what their commitment is, if they don’t know this information about the budget – then that’s another level of concerning.

      What I would choose to focus on is how far below market wage the salary is of the OP’s position and how I would not feel comfortable sharing the vacancy with my network because of it.

      1. Snarkus Aurelius*

        This. You have to remember that the bulk of information the BOD has comes from the CEO.

        This is how I suspect my old CEO was manipulating them. Staff were not allowed any unsupervised contact with the BOD.

        1. In my shell*

          The BOD isn’t supposed to have regular contact with staff – that usurps the CEO/ED and creates endless headaches for everyone and dysfunction for the organization.

          1. Louise*

            This is interesting. I worked at a functional non-profit were different board members were on various sub committees. That way the board was represented on all major committees. As a staff member I worked a lot with a few of the committees so the very nature of the setup made me interact with BOD members. Not to mention the non-profit was heavily reliant on volunteers and board members were expected to volunteer in various ways. When I served on a Board for a different organization I routinely interacted with key staff regarding the committee I chaired that overlapped with their duties. I can see where it can go wrong but it feels odd that it should be common where Board and staff don’t overlap.

            1. MsM*

              Sounds like you had a good governance board with defined roles and point people they respected enough to not try and go over their heads. Not every board is like that, unfortunately. The most recent one I dealt with had to be told to leave staff alone because they kept trying to do staff’s jobs while insinuating (or occasionally outright stating) staff wasn’t doing things right.

              1. Observer*

                Yes, Boards like that are a nightmare. But the reality that this stuff is a balancing act. You don’t want the Board taking on day to day management tasks. But you DO need them to have access to staff and for staff to have access to them without the ED or a manager involved in every interaction.

            2. Claire*

              Louise, that was my experience too working at a community-based nonprofit. As staff we regularly worked directly with board members and it was highly functional.

          2. Observer*

            The BOD isn’t supposed to have regular contact with staff – that usurps the CEO/ED and creates endless headaches for everyone and dysfunction for the organization.V

            This is the classic excuse made by every abusive employer. There is a HUGE difference between “regular contact” and “no unsupervised contact ever.”

            Policies of the latter sort are the kind of thing that causes companies to lose discrimination and retaliation law suits. While you don’t want people kicking every petty complaint upstairs, you HAVE to have a way for people to bypass their supervisor and even to go to the top if need be.

            To me not having that ability is a major flashing red light.

      2. L.H. Puttgrass*

        Right. My guess is that the BoD knows how much the ED makes and is okay with it. Maybe they think the ED is worth it because they’re prominent enough, or a great fund raiser, or have hard-to-get connections (some of whom are on the BoD). Meanwhile, everyone else is replaceable “support staff.” It sucks, but I’ve seen more than one non-profit that looked like that.

        1. Smithy*

          Absolutely.

          For organizations this small, I would be surprised if there was a full-time fundraiser that was on the team and therefore the ED’s connections may easily be perceived as the difference between the organization existing or not.

          It sucks and morale dipping makes sense. But not enough where I’d tell anyone they were ethically required to ruin a reference over this.

          1. Something Something Whomp Whomp*

            That was my first though, and not in a nefarious way – if the BoD sees the ED as being a huge fundraising magnet due to their connections or visibility, then paying them a ton of money nets a better ROI than hiring a less-expensive ED and an additional full-time fundraiser. That’s a really difficult one to get around.

        2. Amaranth*

          In a 5-person shop, its very possible that the ED is doing work normally assigned to multiple people. I’m curious what percentage of their salary is budgeted to admin/program/fundraising. That doesn’t change the perception of the rest of the staff, however, especially if they are noticeably underpaid. I still don’t think that its OP’s responsibility to say something, but if they believe in the mission and word is out not to go work there, it might be worth passing along that common perception is that workers are underpaid because all the money goes to the ED.

      3. Zelda*

        “Maybe they’re under the impression that they’re actually paying everyone above market wage and are just wildly out of touch with wages of the day? ”

        This was my thought– the board is surely aware of the *numbers* for ED, and probably staff, salary. The information the LW has that they might possibly not is the *context* for those numbers. Presenting the research to compare salaries to the market and demonstrating explicitly how each is out of whack is where LW has an angle. Plus mentioning how demoralizing it is for staff.

    8. A Poster Has No Name*

      I was going to ask about this. I’m not familiar with non-profits, but I would assume the Board would have to approve the salary?

      So, either they’re OK with it or they’re hands-off enough not to notice. Not sure which is worse, really, but I think I’d just cut and run. Telling your boss you think he’s overpaid isn’t going to go anywhere, I don’t think, and the Board doesn’t really seem all that with it.

    9. Pay No Attention To The Man Behind The Curtain*

      I wonder if the Board approves x amount in the operating budget for salaries but doesn’t track how it’s divided up…maybe? I know at my org, which is non-profit, that’s sort of how it’s done…at least at my level. My grandboss is given x amount for salary and other compensation in their department budget…how they choose to dole out raises is up to them.

      1. JR*

        It’s typically true that it’s the Board’s job to set the salary line in the budget and the ED’s job to allocate that budget amongst staff members/priorities. That said, the board sets and approves the ED’s salary, so they don’t necessarily know what each staff member is making (though some board members, like the Treasurer, might), but they should certainly know the ED’s salary and therefore what’s left. They might not be taking that extra step to think through the implications for the rest of the team, though.

  6. Vanny Hall*

    Typically nonprofit directors don’t set their own salaries; the director is hired and paid by the board, and the director, in turn, hires the rest of the staff. So this is an issue for the board, not the director, to deal with (or not).

    1. Threeve*

      The director then sets the budget, though–so once he’s hired, the board doesn’t choose his raises, they just approve them (or not). And odds are they aren’t paying much attention. Is the place in the red or getting bad press? No? Great, have a signature, keep up the good work.

    2. Smithy*

      But the Board *should* be aware that 1/3 of the organization’s budget is going to the ED. To me, this matters because if the OP does choose to go out in a manner that’s ethical – it’s mindful how much the Board is engaging with the decision making that has allowed this kind of budget to be set.

      IMO, the kindest scenario is that the Board is somehow under the impression that the organization is paying everyone above market rate. In which case, the OP can focus on how far below market rate they are paid, and what kind of candidate they’ll be better positioned to recruit if they were to elevate staff salaries to the market rate. My take is that calling out how horrible the discrepancy would certainly burn a bridge and unfortunately may just make the Board as well as the ED defensive and change nothing.

  7. Salty Former Library Worker*

    Did ED by any chance work in the private sector before transitioning to the non profit world to “give back?”

    This sounds like the kind of thing a board full of desperate business people would do, believing an ED that acts like a CEO would magically make their org more “efficient” and “competative.”

  8. Tex*

    The most diplomatic way to say something and not burn a bridge is to say : I really like this job and my colleagues, however, the salary was substantially lower than comparable jobs in this city and I could not pass up an offer for a market rate salary.

    That said plus two people leaving at once (for the same reason, presumably?) might make the board perk up their ears.

    1. Annony*

      Yep. The board should already know how much the ED makes if they are at all competent. Flagging the low salary and perhaps the austerity measures that took place during COVID as the reason for leaving should be relatively benign. I probably wouldn’t bring up the ED salary at all.

    2. vlookup*

      I think this would be a smart way to approach the situation, particularly if you’re relying on the ED for a reference in the future. His salary does sound outrageous, but focus on the part that’s most directly impacting you: the salary for your role being so far below market.

      You’re under no obligation to refer your contacts or speak highly of the org, so if you don’t want to recommend the role to your network, just don’t do it. Getting high quality referrals from current and former employees is something organizations can only expect if they create a work environment and compensation structure that makes people enjoy their experience working there.

  9. Malarkey01*

    An ED salary that’s a THIRD of the operating budget??! Four other salaries, office rental and expenses, fundraising, AND your actual mission costs are only 2x more than one salary?

    I agree with Alison in general on ED salaries but wow this would have my seriously pausing as a community partner or donor.

    3. Snarkus Aurelius*

      This is the best and only best response to this situation.

      If you are seeing the operating budget and you don’t have a problem, you are the problem.

      If something is going to take up a third of the budget, at least have it benefit everyone, like office rent or something.

    4. merp*

      And don’t most nonprofits have to publish their budgets? Guess it depends on their funding, but… sure would be a shame if the link to the budget found its way to, I dunno, a reporter’s email inbox, or a nonprofit watch group….

      1. Jayne*

        Only larger nonprofits have to file more complete financials, ones that normally have gross receipts more than $50,000 (source IRS). I co-founded a nonprofit and it will _never_ get to that amount. We only have to file a “postcard” notice that we still exist. However, we are also not large enough to have employees and have a working board. A nonprofit large enough to have five employees would normally have enough receipts to be required to file the full financials.

    5. EmmaPoet*

      If I were going to donate and found this out, I’d immediately strike this option from my list. It’s wildly disproportionate to what it should be, and if I’m making a donation I want it to go towards the cause in question,* not a ridiculously bloated salary for one person.

      *I agree that people working at nonprofits should make reasonable salaries for their area. This is totally unreasonable.

  10. Artemesia*

    I know of someone at a non-profit research institute who was director of one of the locations who paid herself ALL of the bonus money for good work allocated every year because she felt ‘she did all the important work.’ The organization provided the director with a pot of money to reward exceptional work and was unaware that she had hogged all of it for years until someone finally contacted the when they left the organization at which point the power to allocate this money was stripped from her. Make a judgment about risks at the exit interview but find some way to let the board know — perhaps Glassdoor.

    1. Uranus Wars*

      I was wondering about this upthread in the discussions around the board. Is the possible the board approved a salary as a line item for overall cost, not realizing that 75% of what they allocated was going to 1 person, and 25% was split between the other 4.

      1. Amaranth*

        Not unless the ED is basically stealing. The Board hires the ED so they’d negotiate and approve their salary.

  11. Maika*

    Worked at a non-profit where something similar happened years ago. The staff reached out to the Board to share their concerns, including myself, and the Board did NOTHING! The entire staff turned over in six months due to his incompetence and salary issues. The ED stayed in the role for a few more years as the non-profit tanked, and only when things got really dire, that they moved to do something. I have very little hope in the Board ever doing anything.

    1. Des*

      I’m shocked, shocked that the board did nothing. OP you want to do a good thing but don’t torpedo your references.

    2. Snarkus Aurelius*

      In my experience, this is how a lot of nonprofits I worked with operated. The only time I ever saw a CEO fired was when the finances were really, really bad. Not the incompetence and smaller decisions that led up to the horrific situation.

      Every CEO I know is best buds with the BOD, and I assume this is a huge factor. No one wants to fire a buddy!

      1. Lizzo*

        “Every CEO I know is best buds with the BOD”

        I’ve worked at half a dozen nonprofits, and this has not been true at any of them. I’d say it’s most frequently the case at young organizations where the founding CEO has assembled the board themselves, but at established organizations? Possible, but not always true.

    3. museum person*

      this is my experience now at a nonprofit (museum)…. insanely high turnover, the pay disparity between ED and regular staff is shocking. The board and HR simply did not care.

    4. Legal Beagle*

      Yep. That’s been my experience, too. The Board only cares once the ED starts losing the org money. Rampant staff turnover doesn’t raise a red flag, especially if the ED is controlling the narrative that the Board hears.

    5. raincoaster*

      I once worked somewhere similar. As things got tight in the budget, all the full-timers were knocked to half-timers, then ten hours a week, then they were asked to become volunteers. Meanwhile all anyone heard was how devoted and overworked the poor ED was. He’d stocked the board with his pals (he’d put the organization together) and as projects fell apart for lack of workers and donations failed because he wouldn’t pay a fundraiser, he kept not only his full salary and generous expense account, but also (it turned out) was renting out the premises for late night parties even though this violated the lease and caused the organization to be evicted. He rode that organization right into the ground and to this day it’s a mystery to many people why such a great concept failed. Not a mystery to anyone who worked there.

  12. yikes*

    I’m totally disgusted by what you are describing (i’m on team OP) however in playing devil’s advocate…. is it possible ED’s not aware of the situation or that his hands are tied in his compensation? As a non profit is the board trying to keep ED from jumping ship hence the higher salary. They might think it’s easier to replace lower staff than the ED. Is it possible ED has a contract that says regardless he (?) is to be paid $XYZ.

    As for your questions OP, I would definitely say something during the exit interview. You would at least be giving them an honest answer to why people are leaving or not as dedicated to working there.

    1. Pop*

      To be blunt, if the ED is not aware that their salary being 1/3 of the organization’s budget is a problem, they are either extremely under-qualified or very out of touch. If they were truly in the situation above, a reasonable ED would go to the board with a proposed solution to cut their own salary. It seems pretty unlikely that “their hands are tied” with no other solutions, INCLUDING transparency to the staff.

      1. yikes*

        Pop please understand I am totally on your side. I 100% agree with what you are saying. I was playing devil’s advocate. I agree ED is very naive to think this is “normal” that he is overpaid and his staff is drastically underpaid.

        1. Pop*

          Ha, yes, but I think even the devil’s advocate argument here is very weak and worth shooting down!

        3. Observer*

          The devil doesn’t need any more advocates.

          If you really wanted to do the job though, you need to come up with some more plausible scenarios. The one you paint requires significant incompetence on the part of the Board AND the ED. Which is not a whole lot better than malfeasance.

    2. Temperance*

      If the ED is being paid that much, he likely does have a contract, and he’s likely aware what his staff is being paid. If not, he’s clearly not qualified for the job because budgeting is a basic requirement of running a nonprofit.

      1. WonkyTonk*

        This. If he doesn’t know the budget of his own organization, he’s incompetent and not earning his salary. So either way, the situation is off.

  13. Phil*

    This cries out for a reporter who “discovers” this information in the public tax documents. If, that is, you actually still have some form of journalism in your city.

    1. Paul S.*

      Tiny, top-heavy nonprofit orgs are everywhere. Unless it’s truly obscene it’s sadly not newsworthy.

      1. Esmeralda*

        Can’t hurt to try. It might not be on the news organization’s radar. But a tip that gives a reporter something that could be turned into a story might work.

      2. RebelwithMouseyHair*

        Sometimes, a couple of phone calls from “journalists” about digging up the dirt may prompt the Board to investigate.

      3. Smithy*

        In addition of it not really being newsworthy, it risks backfiring on the OP.

        Overall, the nonprofit sector doesn’t love those stories because they more often impact nonprofits by validating the depression of wages. So if a local journalist were tipped off to start looking at the salaries of local nonprofits – it would likely extend to more organization’s than just one, and wouldn’t generate much sector goodwill. Cause those stories are never terribly nuanced.

        1. Claire*

          ^this. There will be collateral damage to unrelated nonprofits if there is a news story. Please don’t run to the press with this; try to work internally to fix this if possible.

      5. Snarkus Aurelius*

        I don’t know. ProPublica nailed the Red Cross a bunch of times a few years back for similar behavior, and they lost a lot of donors.

        1. ThatGirl*

          Red Cross is a huge, internationally known organization, which makes it inherently more newsworthy; they’ve also been nailed for not really helping the people they set out to help. ProPublica also does this sort of reporting for a living – I have worked at smallish daily newspapers and I really can’t see any of them spending their extremely limited resources on a story that isn’t all that newsworthy. If this org isn’t spending the money they DO have budgeted wisely, that’s a different story, but just overpaying the director is frustrating but not necessarily worth the reporting.

        2. Observer*

          Yes, they did. As others have noted, ProPublica is a different animal from your typical “hometown newspaper” and the Red Cross mess was waaaaay bigger.

          Having said that, this wound up hurting a lot of other charities. I don’t fault ProPublica for that, because they were not pointing fingers at other organizations. And the problem at the Red Cross NEEDED to be brought to light. But there was collateral damage. I’d be a bit hesitant to create the kind of collateral damage in my city over an organization this small.

          1. Smithy*

            Yeah….often the reality with this kind of coverage is that it brings additional oversight to organizations in the wider community. And that oversight most typically means that more work is required of the nonprofits to get funds. And that “more work” translates into increased staff time on fundraising efforts as opposed to other work.

            This isn’t to say that there shouldn’t be care and oversight in how donations are given – but in the case we’re talking about it’s important to be mindful that this is all information that is already public. And donors could be doing this due diligence and are choosing not to. Or are doing this due diligence and based on the nature of the ED and kind of work being done, currently find this acceptable.

            So the most likely scenario is that these donors get embarrassed and then do something reactionary. For good or ill.

      6. raincoaster*

        Oh no, I’m a reporter and I know a few who’d love to get their teeth into this. But local journalism has been hollowed-out by increasing centralization and push for shareholder returns, so you’d have to know exactly the right person at exactly the right outlet to take it to.

    3. June First*

      Coming here to say this. We had a similar situation in our city, and reporters were comparing 990s from various local nonprofits. The director in that situation had a policy of “terminating” board members who questioned the agency’s finances. The director was covering two positions and taking both salaries instead of hiring another person, IIRC.

  14. Paul S.*

    I know that LW says they know the ED’s salary was a third of the budget last year, but is that knowledge from the 2020 filing, or is it extrapolated from previous years? I would be surprised to see a 2020 filing already available online, when nonprofits I’ve worked for have been notoriously slow-moving on getting their filings done. Is LW SURE that the ED didn’t take a pay cut last year?

    Other than that, I get it. ED pay is sometimes ridiculous, and what can be done about it often depends on the ED’s relationship with the board. But do consider that the board has total visibility into the books is not accidentally overpaying the ED. LW might be doing the next person or even the organization a favor by saying that they’re leaving due to low pay, but noting the ED’s compensation is likely to be unproductive.

    I’ve had two offers collapse this year and have signed a third which I hope will stick, and despite my unhappiness in my previous position I am glad to have left the bridge unburned. It might be most pragmatic to cite professional growth in the exit interview and kick the dust from your feet on the way out.

    1. Aquawoman*

      I was wondering the same thing, because I work in an area that makes me all too aware of how non-current a lot of this info is.

    2. Non-Prophet*

      Yes, I was wondering the same thing about the current-ness of the filing information. In addition, unless the organization’s fiscal year happens to be January thru December (pretty uncommon for a nonprofit), the compensation info reported on the 990 will be a year behind the rest of the financial info included in the 990. For instance, most organizations 2020 990s will report compensation based on 2019 W2s. So if the ED had in fact taken a paycut related to the pandemic, it won’t show up on the filings until the 2021 filing, at the soonest.

      That said, it’s egregious that the ED’s salary is a third of the total operating budget.

  15. Des*

    Do we really think that raising this issue will change anything? That he doesn’t know exactly what he’s doing? That the board somehow hasn’t noticed? I might be too cynical but I’d say that the OP has bought into the ’cause’ of the non-profit enough that they felt like it was a good idea to recommend this job to people in their network despite knowing its pay is way under market. But I bet there are other non profits saving the same cause who don’t screw people over. You have inside knowledge; go for those instead!

  16. Pocket Mouse*

    There’s a soft-but-honest option to reference how your below-market pay influenced your decision to leave, and that you wish you could endorse the position and refer people in your network, but unfortunately are unable to do so until all salaries at the organization are reviewed and brought closer to market rate for your city. Would you be more comfortable if you talked to the other coworker who’s leaving and decide to both bring it up in your exit interviews?

    As for regaining the trust of the two who are staying- I’d let that part alone. That’s a situation for those staff to manage for themselves.

    2. tamarack and fireweed*

      Yes, this. Bringing this up, in a low-key but serious and professional way does not necessarily mean you’ll leave on bad terms. In fact, sane organization listen closely to feedback from leavers. If they decide to take it badly, that’s on them.

      There’s a lot of pretty irrelevant stuff in the threads about what the board must have known or might not have known. The board may be uncaring about underpaying most of the staff; in which case bringing it up won’t shift things. Or it may somehow be convinced that the pay rates for staff below the MD are adequate and that it’s ok to overpay this one particularly rare and precious pearly they think they have in their director. And it’s pretty unlikely to be aware how badly morale is affected now that these salary discrepancies are in the open. If the OP cares about the org and the niche it occupies in the social fabric of their town, and the workplace it *could* be, it’s completely normal to want to offer one’s input at a juncture where inputs are commonly offered.

  17. Esmeralda*

    charitywatch DOT org
    charitynavigator DOT org

    These rate nonprofits on transparency and accountability, executive pay, efficient use of donations, etc.

    OP might flag the nonprofit to these organizations. Possibly the nonprofit is too small to be reviewed by these groups. In which case, perhaps give a tip to a local newspaper or tv station that has a consumer protection beat.

    1. BAP*

      Charity Navigator is improving, but still has a long way to go. Pretty much all of their rating measures focused on overhead vs. program costs, which rewards charities for keeping infrastructure costs low. Some orgs can operate efficiently this way, others need really robust infrastructure to support their operations. How can you rate a museum, environmental advocacy group, and animal shelter using the same metrics? You really can’t. Plus, some orgs will game the system–I worked for a very large, well known org that is currently on one of CN’s top 10 lists; the marketing/fundraising costs were astronomical, so they reclassified fundraising appeals as “Educational” materials so they would go as program expenses.

      They recently have added info about impact/program results, which is a step in the right direction.

      1. Smithy*

        When the Notre Dame had that large fire, all of the donations they received just made me bristle – not because the church wasn’t worth repairing, but because with a quarter of that money ahead of the fire….imagine the infrastructure upgrades.

        The focus on Charity Navigator and stressing low overhead without context absolutely leads to “gaming” the system. And the organizations that can afford the better financial staff and better administrators often do it with more sophistication.

        The OP doesn’t need to feel good about this situation and should definitely feel free to highlight the problem of their role being paid below market value. However, I don’t see the good in flagging the ED’s salary to the Board or more publically. Partially because that information is public. I recently worked somewhere where the ED’s salary “came out” and subsequently upset a bunch of people. And even at the organization, the other side of the scenario was staff being like “you didn’t check the 990 before you took the job??”

        It’s not that other issues don’t come into play and I’m certainly not saying the OP’s organization appears to be well run…..but for a move that will most definitely ruin a resume. This doesn’t seem worth it.

  18. awesome3*

    If a director of a non-profit was making more than the market rate (let alone double!) I would expect the employees to be paid at or above the market rate. In a non-profit where all of the employees are making half of what they could make elsewhere, I would expect the director to make at or below the market rate, even if it wasn’t as low comparatively to the employees. It’s very incongruous, and until it’s fixed they are going to have a terrible retention problem.

    1. Rusty Shackelford*

      Yeah, this. I mean, it’s not good if a non-profit pays everyone below market rate, but at least it’s bad all around.

      1. ItsMeMario*

        Mine does it as a practice because they believe other perks make up the difference (tuition remissions for example). But it takes a LONG time to sit around at below rate to make use of that “carrot”

  19. Greg*

    A public service announcement for everyone:
    Tax-Exempt Organizations file 990 tax forms.
    These can be found by googling organization 990.
    propublica.org is also a good place to find the 990.

    1. Abogado Avocado*

      Guidestar.org also will allow you to review the 990 for free once you’ve established a free login and password. 990’s — for those who are unaware — require the nonprofit to report the highest compensation at the organization and, usually, the ED’s salary leads the list.

  20. I'm just here for the cats*

    I’m wondering if the board of directors realizes that the ED’s salary is so much out of proportion of what the typical salary is.

    1. Snarkus Aurelius*

      Oh they absolutely do. I bet you they approved his pay. Their job is to keep an eye on overhead and program expenses!

  21. Dan*

    I work for a non-profit that fairy compensates its employees. (Heck, I came from a for-profit in the same sector that paid its employees way less, while complaining that our costs were too high. I always loved that one.)

    Nothing bristles my skin more than the belief that employees at a non-profit need to take it on the chin compensation-wise, because, well “non-profit”.

    1. Observer*

      No one is making that claim. And Alison addresses that up front.

      This is NOT what is going on. This is ED – 2x market rate. Other employees – . 5x market rate (so ED is 4x employees relative to market rate). All the while the organization is also cutting other necessary expenses.

  22. Abogado Avocado*

    If you really want to make a difference in compensation at the nonprofit, don’t meet with the ED. He’s got a sweet deal and your exit interview won’t change that. Rather, meet with the chair of the Board of Directors and explain how the ED’s compensation is creating problems with employee recruitment and morale.

    If the Board chair doesn’t understand the problem, show the chair how to go to http://www.guidestar.org and create a free login and password. This will allow the chair to pull nonprofit 990 tax returns and compare the ED’s salary with the salaries of ED’s at nonprofits of similar size and scope. In this way, the chair can understand what you’re saying: that the salary imbalance at the nonprofit is harmful for the overall health of the organization.

    Wishing you all the best.

  23. Snarkus Aurelius*

    The BOD knows what this guy makes. They probably approved it. Even so, they’re supposed to study the operating costs.

    They are very much part of the problem!

    I worked at a charity during the Great Recession. The CEO was heavily pursued for this position so I assumed her pay would be decent.

    This was in DC. She started at $250k. Within two years, when we were laying off people, she’d doubled her salary, and there’s no way the BOD didn’t know. She cut retirement contributions, but she’d kept her own. We started hiring unpaid interns to do the work of the laid off paid staff (illegal!), but her $500k salary remained. She “worked” during her vacations so she never took time off when she was supposed to. We had all non-monetary benefits frozen. When her assistant suggested we all take pay cuts, the CEO wanted to consider it seriously but exempt herself.

    It absolutely affected morale. Everyone was pissed. But I don’t think it mattered because the BOD either didn’t know or didn’t care.

    1. DC NPO person*

      Huh. I worked at a place just like that too.

      It had been a great place until our ED, followed by a toadying AD arrived.

  24. Bethie*

    I am curious if the agency has a good rating within the nonprofit community? Its been about 10 years since I worked in non-profit but I know things like this – ED or CEO salary being so high and 1/3 of the budget would end up with a negative rating. See how Susan G Komen and Wounded Warrior were dinged in the past. Because the dollars are not going to direct services but to the salaries of the higher ups. This could be the issue the board needs to know.

    1. Snarkus Aurelius*

      And the bulk Komen’s fundraising still doesn’t go to breast cancer research. They only donate about 19%. They aren’t technically breaking the law, I guess.

      Some nonprofits, like the one in this letter, I suspect, are good at classifying certain expenses so they keep the overhead down.

      1. Bethie*

        That’s probably it. I know the one I worked at had a 14 million annual budget and the CEO make 100-150k per year? Which is reasonable for that budget and the fact I live in a very large expensive southern city. But when he was hired that was a discussion point for the board and us in fundraising as we didnt want the salary to be viewed negatively, but still attract a good acandidate.

  25. SentientAmoeba*

    Lay it out:

    Once I announced my departure to my professional circle, I was made aware that there are some concerns about this org because, based on publicly available information, the employees are severely underpaid according to market rates for similar positions and the ED is paid significantly above market rates for similar positions. This disparity has made many reluctant to apply to work here, despite their support for the cause the nonprofit supports.”

    They don’t need to know the extent of the professional circle you spoke to is the remaining employees of the org.

  26. JSPA*

    I suspect the IRS doesn’t love most of the variants of this process (though maybe there’s a way to make it happen that’s kosher under tax law) but:

    I’ve seen situations where (say) a person themselves, or their parents, or their spouse, or a benefactor, donates a very large sum to a nonprofit, with the understanding that a designated person (themselves, their spouse, their child, someone else important to them) will reap a generous salary.

    This could be that.

    The goal is not always tax evasion (illegal) or even tax avoidance (legal). Sometimes it’s social status. Sometimes it’s a safe landing for someone who’s had issues.

    Sometimes it’s a run around any of many sorts of complexity:

    A way to provide for a grandchild, when the intervening generation is combative and lawyered up enough that setting up a trust that cuts them out, in favor of the grandchild, is likely to lead to a court battle.

    A way to help a family member unwilling to accept help (in which case, it’s even at least remotely possible that the person taking the large salary is not entirely aware of how out-of-line their designated salary happens to be).

    A way to set up an ex or paramour in ways that don’t raise red flags with one’s spouse.

    Tax / cash flow variants may be legal or illegal, depending on how they’re constructed, and what taxes are being paid. Say someone donated the land and a building as headquarters, and they or their assignee then benefit from a sweetheart salary for some period.

    People who read this site know: Being non-family at a family business can be awkward. Nonprofit norms can be off. There are downsides to working at a place that’s essentially a front for some other purpose (even if it doesn’t leave you with dirty hands, individually).

    So, no surprise that a nonprofit layered on top of a tax scheme and/or family engineering scheme can be all those sorts of problematic. But if someone comes in knowing the lay of the land, it’s actually not automatically a bad situation, depending what the back story is. A carefully crafted pet project can be a soft landing for a family member, and also do good work, even if the rest of the staff is paid based on general donations, and one person is paid based on basically having the equivalent of an endowed chair.

    If this were a general hiring question and workplace, I’d feel it a (modest) invasion of privacy to go deep in the tax filings and do deep searches on family relationships, and a larger invasion to publicize them. But it’s a nonprofit. Much of this stuff is supposed to be public; people are being asked to donate to the group; disclosure is the default.

    I’d keep digging (backwards, in particular). Maybe it’s an open secret that the boss’s granny set up the foundation 30 years ago, stipulating family leadership and a certain minimum, inflation-adjusted salary (or a per annum boost, or what-have-you).

    This can also be done to inflate an organization’s size. Maybe boss is donating back X percent of the salary to the organization. Or making large donations to the organization of a sibling, while the sibling donates similarly large sums to boss’s organization. With nonprofits, following the money is often key to understanding who (if anyone) is being shafted, and how, and why.

    Finally, there are plenty of people looking for even a rocky and unpromising safe harbor in a storm. Good for you if you can find something better. But pre-judging that nobody decent would want to be in a situation of pay inequality, or that you’d be doing them a disservice to help bring them onboard, is a bridge too far. It’s not fair to them, nor to the organization.

    2. Dust Bunny*

      If any of this “well-intentioned” stuff is happening while non-family employees are being shafted it’s entirely fair to judge because by definition that is an indecent thing to do.

    3. Observer*

      Sometimes it’s a run around any of many sorts of complexity:

      A BOD has no business allowing the organization to be put in the middle of a mess like that.

      A way to help a family member unwilling to accept help (in which case, it’s even at least remotely possible that the person taking the large salary is not entirely aware of how out-of-line their designated salary happens to be).

      So, the BOD is allowing the main management of the organization to be handed to someone who is not competent to run the organization?

      Tax / cash flow variants may be legal or illegal, depending on how they’re constructed, and what taxes are being paid. Say someone donated the land and a building as headquarters, and they or their assignee then benefit from a sweetheart salary for some period.

      Highly unlikely to legal and definitely and ethics problem.

      1. JSPA*

        If the big donor started the organization, the B.O.D. may well be hand-picked to that end, or staffed with family members.

        It’s also something that can happen when a local not-for-profit (run on volunteer labor for many years) has dangled before them, the chance to become an official nonprofit.

        Local eco, bike-trail, waterway, greenspace orgs, historic societies, and in general, societies “for the preservation of” seem somewhat more prone to this.

  27. some dude*

    There is a lot of handwringing over the idea that people in nonprofits are overpaid and/or are frittering money away. In my experience, the opposite is usually true – people at nonprofits are severely underpaid and are so starved it negatively impacts their mission.

    And then there are the rare cases like this guy where he has the board wrapped around his finger and he’s making $300K on a $1 m budget, while his program directors are making $50,000 a year. Does he leverage his role to do consulting on the side, or a lot of public speaking, or any other side hustle? Because that’s fun too.

    1. awesome3*

      I highly doubt the staff are making 50,000 a year, the LW mentioned they are making half of the market rate. It’s not on us to come up with figures though anyway.

    2. Snarkus Aurelius*

      When I worked at a charity, my CEO was besties with a higher up at a certain Fortune 300 company. (Everyone here and worldwide has heard of them.) All she had to do was get a huge multi-million donation every year, which she did. That justified her $500k salary and distracted the BOD from serious organizational issues, namely that was the ONLY major donor we had.

      She got fired eventually though.

      1. EchoGirl*

        Yeah, that’s bad news even apart from the whole issue with the CEO getting overpaid. My dad worked at a nonprofit once that drew a huge part of its operating budget from yearly grants from one foundation that was willing to write them big checks every year. When leadership changed and the grant amount was cut significantly, the organization pretty much collapsed. From what I can dig up on the internet, it looks like they’re still active, but last I heard they were operating at nowhere near where they used to be (and if that has changed, it would be because they rebuilt from the ground up).

  28. LCH*

    there’s an article on Chron stating that if an NFP spends too large a percentage on admin (salaries, etc.) then the IRS could review and revoke the tax-exempt status, assuming this org is tax exempt. anyone know if that is true? so the dollar amount of the salary doesn’t matter, but the percentage is a big deal.

    1. Bethie*

      I am not sure if they can revoke – that would be nice IMO. But I do know it will negatively effect their nonprofit rating.

    2. vlookup*

      Nonprofits have to disclose their spending on admin, fundraising, and program in the 990, but I don’t know whether high overhead spending can jeopardize your tax-exempt status (it can certainly deter donors, however).

      I do want to point out that salaries are not inherently admin and are also not an inherently bad thing to spend money on. Personnel costs represent the majority of expenses at many nonprofits (as well as many for-profit businesses) and the salaries of staff who work on the program side would generally be classified as program expenses.

    3. anonforthis*

      There is a requirement by the IRS that highly-paid staff, key persons, need to have “reasonable” compensation. This reasonability test is usually conducted by an executive/compensation committee on the non-profit’s Board of Directors annually, using salary surveys to verify. If a nonprofit is deemed to provide “excessive” compensation by the IRS, it could be deemed as not benefiting the public interest, putting its tax exempt status at risk.

      A second to vlookup’s comment, salaries are not always considered admin. Anything that is not back office/fundraising will usually ride on the programming side of the budget.

  29. Lifelong student*

    I often review 990 filings on Guidestar and share the information with my circle. Many are surprised at the information available. A local entity which touts itself as operating a charity funding event which should not have to pay for taxpayer funded services actually only gives 6% of its revenue to charity- while costing the taxpayers more than 6 times that amount!

    I support the idea of a quiet word to local journalists!

    However, the fact is that the information on Guidestar is from a prior period- fiscal year 2019 is probably the latest one on there does suggest some caution.

    1. Lizzo*

      FYI, 2020 fiscal statements are probably just starting to be ready, depending on organization size. The fact that the most recent statement is from 2019 should not be alarming.

  30. TootsNYC*

    If I wanted to say something, I think I might reach out to a board director a little bit after I’d left and ask if we could go for a coffee.

    And explain about how demoralizing this is, and also give the evidence about how different the compensation is for the market and the position. The board should know what they’re paying their ED, and should also know how that compares with other places.

    But they may not have done their homework, and often boards make these decisions based on studies and info and arguments presented by the EDs themselves, and often using marketing or negotiation consultants that are paid for by the organization but who are directed by the ED.

    And the effect on morale is not something they know. So…

  31. Jay*

    A couple of quick questions:
    1) How did this person find out about the E.D. salary?
    If your friend managed to get a hold of privileged information, hence could be open to censure of some kind, that could influence your course of action. Giving the E.D. a chance to act like the aggrieved party while opening up the whistle blower to retaliation could be a real problem.
    2) How accurate is the source material and has it been verified elsewhere?
    At a previous job, a number of years ago, there was a near riot because of a typo on a memo that had one low level manager making a truly absurd salary. Turns out that someone misplaced a decimal point on a form that virtually no one read. Their actual pay turned out to be low enough that they eventually got a nice raise out of the affair in order to bring it in line with the rest of the managers at their level. And on a personal note, there are lots of stories about people in my profession making massive salaries. These are all sourced from a group of people who Do. Not. Like. Us. They arrive at them based on taking our highest possible pay, including all possible overtime and bonuses, and assuming we work literally 24hrs. a day, 7 days a week, for a full 365 days. It can come out to anywhere from 10x to 50x what people actually make.

    1. Lifelong student*

      It is a non-profit. There tax returns are public knowledge and available on several on line sites. Executive compensation is listed- along with paid benefits.

    2. Smithy*

      In the US, nonprofits are required to publicly file their taxes that includes the salaries of the ED/CEO and I think the 4 highest paid staff? Something like that.

      How accurate….hopefully rather accurate. What I never entirely remember is if those salaries are inclusive of any benefits or not, which can make them appear higher.

      All of which to say, anyone who works for a US foundation can find out what their ED was making at least a year or two ago. Most people don’t look it up when they take jobs, but it’s entirely public. However….given how high salaries certainly can be and given how large those discrepancies can be, it’s certainly possible to tank morale. However, because it’s also public…..there’s often another side of people who already know and either don’t care or have come to terms with it.

    3. OyHiOh*

      In the US:

      A non profit’s 990 form lists much of the information the LW is aware of, including the ED’s salary. A 990 form is the public verification of certain information, including ED’s salary, that results from decisions by the board of directors, bookkeeping, and annual audit.

      A non profit’s 990 form is a publicly accessible document that is available through CharityWatch and Guidestar.

      In some states, a 990 form easily accessible through the Secretary of State’s website, though mileage may vary. In my state, a non profit’s Articles and 990’s are available, free; in some states, you have to pay to see anything at all and of course, there’s many gray variations between.

      Non profits operate in a whole different little world where information that would be difficult to impossible to access in for-profit industries is easily available in the name of transparency, if you know what to look for (a 990 form is the place to start when one is looking).

      Depending on the nature of the non profit, it may also be subject to public records requests. When this is the case, everything from board minutes, agendas, and packets, to written communication between staff may be requested. My org is non profit and government adjacent. Because we’re funded through federal grants, we’re in the public records request domain. An interested party can even read our audit reports, by accessing board information on our website, reading agendas to find where the audit was presented, and then opening the board packet for that meeting.

    4. Observer*

      If your friend managed to get a hold of privileged information, hence could be open to censure of some kind, that could influence your course of action

      The ED’s salary is not privileged information. If the ED / BOD act as though it is, that presents a problem for the OP, but it’s a sure sign that there is a problem here.

      How accurate is the source material and has it been verified elsewhere?

      If the publicly available tax filing (which was the initial source of the information) is not accurate, then the organization needs to be shut down.

  32. Goldenrod*

    I totally agree with this:

    “You’re not obligated to raise uncomfortable truths that could jeopardize things that are important to you (whether it’s relationships or future references) just to provide free consulting to an organization you’ve already decide to leave (particularly when there are other ways for them to receive feedback from staff if they really care to)”

    Especially that last part – there are other ways for them to receive feedback from staff IF THEY REALLY CARE TO.

    I’ve been in similar situations and realized that no one really wants to hear it…You can’t wake up a man who is pretending to be asleep…If they wanted to know, they would know. I think OP should make a clean break!

  33. Mannheim Steamroller*

    If the nonprofit receives ANY public funding, then you should also inform a few elected officials at the same level as the funding source(s).

  34. knitcrazybooknut*

    I know of a non-profit organization whose ED received a good salary for the highly skilled, well-paid industry. The organization didn’t really have an employee manual, so no limits on accrued vacation. The ED traveled some for work, but also just liked taking expensive vacations. His admin filled out his timesheets, and whether out of loyalty or under his direction, she almost never put any vacation time on them. (A very old school, the boss is always right mentality.)

    He worked there for at least five years, and when he left, he had hundreds of hours of vacation time that had to be cashed out at the rate of $200 per hour. It nearly bankrupted the organization entirely.

    Always have an employee manual! And it should make sense!

  35. anonforthis*

    I’m an ED of a nonprofit. In the United States, Boards should be setting and reviewing ED compensation, and the IRS requires that all highly paid executives have comp packages reviewed annually by the Board to be tested for reasonableness. Nonprofit compensation is pegged on the sector and the size of the organization’s budget and its assets/liabilities. Not sure how significantly the revenue at this organization was impacted by COVID-19, or what its reserves look like, however if an org has a lot of assets (even if revenue went down last year), it still could justify a higher salary for the ED. Regardless it sounds like the Board is out to lunch. If you make a complaint, I would focus on the challenges to mission delivery facing the organization, including sparse resources which results in staff paid at about half of the market rate and not enough resources devoted to the direct costs of mission delivery. You could mention how challenging for morale it has been since non-executive staff are struggling to make ends meet, and it was especially trying since it seems senior staff appear to not have to bear the burden in the same way. Glad you have a new job awaiting you. Good luck.

    1. Robin Ellacott*

      This is beautifully put!

      “I would focus on the challenges to mission delivery facing the organization, including sparse resources which results in staff paid at about half of the market rate and not enough resources devoted to the direct costs of mission delivery. You could mention how challenging for morale it has been since non-executive staff are struggling to make ends meet, and it was especially trying since it seems senior staff appear to not have to bear the burden in the same way.”

    2. lonestarbrooklyn*

      I would 100% make sure the board knows how stark the disparity is. It is indeed WAY WAY harder to be an Executive Director than even the next highest level of employee but there should not be people making 1/2 market rate when you’re making marketX2.
      What kind of work is the nonprofit doing that 1 single salary could make up 1/3 of the budget? What is the % of the budget that the rest of the salaries makes up?
      In many cases most of the board does not know what individual staff members make, they just see a total number and if you’re lucky they know that $X (or X%) of it is the ED. So that “Personnel” line might line up with everyone being paid at the market rate, but ED’s got it divvied up badly.

  36. Sparkles McFadden*

    I find it interesting how most people think in very binary terms. It’s either “say nothing because I don’t want to burn a bridge and hurt everyone else” or “call the newspaper and then go to my exit interview, stand on a desk, and shout ‘J’accuse! J’accuse’” (Forgive my hyperbole, LW. It sounds like you’re smack in the middle of those two extremes and are trying to decide what to do. This just reminded me many similar situations.)

    It would be perfectly normal to go to the exit interview and/or write to the board and explain how you have valued your time at in your workplace. You may then comment on the extreme disparity in salaries and how that affects the non-profit’s mission, particularly during a a pandemic, when fund-raising would be difficult. It would be great if there were a mission statement you could site for the purposes of comparison. If you have figures from similar non-profits, you could state the percentages of various line items on operating budgets…and include salaries, or compare salary at your level to the amount you could earn elsewhere. I really wouldn’t see anything wrong with comparing the percentage of the budget paid to the ED vs. the figure at similar workplaces, but you could shy away from that if that makes you feel uncomfortable.

    In other words: State facts and remember that you didn’t create the facts. Also remember that this, ultimately, isn’t your problem to solve. Do what you can live with, but don’t be surprised if nothing changes.

    …and no, I wouldn’t find your own replacement.

  37. Hedgehog O'Brien*

    Alison I’m going to be honest, I love your blog but I’m not a huge fan of the way this is worded:
    “I don’t always agree when people complain about ED pay, because even what feels “high” for a nonprofit can be very low compared to what that person would make for their skills in the private sector, and you often need to pay very competitively for talent for those roles (roles which can be immensely demanding). There’s sometimes an ethos in the nonprofit sector that people shouldn’t be working there for the money, and I don’t agree with that at all; I think everyone should be compensated fairly for their labor, including those running the organization.”

    I get what you’re trying to say, but the reality is that ANY professional in a nonprofit is paid lower than what that person would make for their skills in the private sector – not just ED’s. Accounting, Finance, Marketing, IT – all of these roles need skilled talent in the nonprofit sector, and anyone in those fields could be getting paid a lot more elsewhere. Of course ED’s should be paid more compared to everyone else at the organization, but the idea that people shouldn’t work in nonprofit for the money applies to everyone working in nonprofit. I think the pay disparity is a bigger issue in nonprofits because while at a private company you might have a CEO making millions and a Marketing Manager making $90K, the Marketing Manager is probably doing fine on their salary. At a nonprofit, you might have a CEO making $250K and a Marketing Manager making $45K. So at that point, the Marketing Manager might even be struggling financially on what is considered a market salary. Everyone wants to be paid more, but sometimes it’s not in the budget and it impacts lower and mid-level employees much more than those at the top. Again, that’s not what the letter writer is talking about but just adding some perspective from someone who has worked in both the corporate and nonprofit sectors.

    1. Ask a Manager* Post author

      Yes, that is absolutely true and I agree 100%. Often it’s because the organization figures there are a lot of marketing managers they can hire at that price point (especially if they’re a prestigious organization or a cause a lot of people want to work on) and far fewer people qualified for the ED role. That’s not entirely off-base in a lot of cases, although it does fall apart if the particular ED they hired isn’t achieving at a very high level.

  38. Lizzo*

    LW, the Board *should* be aware of what the CEO is up to, but that is assuming that the CEO has been truthful and transparent with the Board. Are you able to get your hands on documents from board meetings, including meeting minutes and budgets?

    Are there any major donors–individuals, corporations, foundations–who support the organization? If you’re concerned that the Board won’t be responsive, you might try reaching out to donors, especially if you or someone on staff has a relationship with them. The consequence of losing funding is probably the only thing that will spark any change here.

    1. Smithy*

      Depending on the nature of the relationship the OP has with a donor – there might be an opportunity for discrete conversation….but I think this represents far too much risk to the OP.

      Given the overall size of the organization, the ED might very well be handling the majority if not all of the donor relationships. In which case the OP is a relative stranger presenting a donor with publicly available information that the donor apparently has not ever requested. Or if requested, did not read or did not care about.

      The chance for this to spread around the relevant community of either the region or sector then becomes the largest likelihood, and only risks making the OP look bad.

      1. Lizzo*

        If OP is presenting factual information, and a donor or board member decides to drag OP’s reputation through the mud for bringing those facts to light, that’s a convenient way to identify who has integrity and who cares about doing the right thing, and consequently, who is to be avoided.

        OP: do you have a strong professional network outside of your workplace? People who know you and can vouch for you and your integrity? There is a risk in speaking out about this, but if there are people who have your back, that should soften the blow of any negative reactions.

    2. Observer*

      but that is assuming that the CEO has been truthful and transparent with the Board

      You mean that the BOD would not have seen the tax documents that are being filed on their behalf?

      1. Lizzo*

        Possibly! If the BOD is full of friends of the CEO (this is very feasible at a young nonprofit), *and* they trust the CEO to do the right thing, *and* they are unaware of what their responsibilities are as board members–e.g. they think they’re only responsible for bringing $$$ in the door, not the responsible fiduciary management of those funds–then yes, it is completely possible that they are unaware of what’s actually going on.

        It’s not exactly the same scenario, but I once had a director who would only report head counts for events, and not the underlying financial situation. Turns out 75% of those event participants received free or steeply discounted registration. Meanwhile our costs were going up to accommodate the growing head count. So, the numbers looked great to the VP (“We have 100 more attendees than last year!”), but the truth was that we were very financially unstable. (I jumped ship quickly when it was clear that they weren’t interested in making changes with organizational stability in mind…and that ship has since sunk.)

        1. Observer*

          If this is the kind of BOD in place, then the odds of the OP having any success is almost nill.

          1. Lizzo*

            Right, which is why I’d suggested reaching out to donors/funders, who probably care about how their money is being used.

  39. Delta Delta*

    I haven’t read all the comments, but if this is a nonprofit there should be a board, and it should be the board that approves the budget, including salary. That’s where I’d go, since it’s unlikely the ED sets his own salary.

  40. Observer*

    OP. I don’t think you have an obligation to raise this with the Board or anyone else for that matter. Although I do think that you should either not help them find a replacement or tell them up front what the deal is.

    But if you DO want to try to do something, I don’t think that the Board is going to be your best route. They KNOW what his pay is. And they SHOULD know what market rates are and how other salaries compare to market rates in a general sense. They might not know the exact details, but they should have a general sense.

  41. Ashley*

    LW I would at most mention the low salary during an exit interview. If there is a Board member or major donor you are close to you could mention the salary discrepancy. You are on your way out the door so finding out the why isn’t really something you need to spend time understanding.
    I will say in small non-profits sometimes the ED comes on and then staff is added. They may have overpaid the ED from the beginning and keep adding staff when they really can’t afford to but are desperate for staff. So they may have never reconciled salaries causing the current disparity. A good Board would want to address this, but if you aren’t staying in the non-profit I think it is fair to only do a courtesy of mentioning the low salary during the exit interview. For your co-workers staying they should definitely discuss this while they will be undertaking more work and positions will be being advertised.

  42. Beth*

    I don’t think you’re obligated to raise this in an exit interview. It’s such an obvious problem that if the board isn’t aware of it, that’s on them. If you can track this down easily through public data, it should be obvious that it’s public knowledge; and once people know they’re being massively underpaid so their CEO can be massively overpaid, especially amid such a large-scale crisis, it’s obvious that there’s going to be some discontent resulting from that. Having multiple staff members leaving at once should be the nail in the coffin. If they can’t connect those dots together already, I’d bet there’s some willful ignorance at play; if they cared, it would already be noted and resolved.

    I do think it would be good to mention just how far under market value your pay is. That’s easy to bring up, since it’s an immediate factor in your departure, and it does at least point in the direction of the bigger problem. And I think you’re right to not assist in this search; in fact, I think you’d be in the right to warn off any colleagues you know who ask you about the organization. But in terms of going further than that, it’s not your job to risk burning bridges by forcing them to confront the elephant in the room.

  43. Sarah*

    If this is accurate, your board of directors is being grossly negligent. They should be ensuring your director is paid at market for size and scope of the position.

    1. Aglaia761*

      Agree, and the funders are also negligent for giving to an organization with this type of disparity.

  44. staceyizme*

    What’s the whole “he pays himself”? Doesn’t the board have to approve his salary and overall package?

  45. dorothyparker*

    Agh. As a nonprofit person, I have so many feelings. The biggest of which is that I fully agree with what Alison says but in my experience, I’ve seeing org leadership justify the CEO/ED pay being so high because of competition in the business sector BUT when staff try and advocate for better pay, we’re told that being in non-profit means we need to expect lesser pay and it drives me INSANE, especially when a pay bump for me is 10-15K and our CEO is out here with more than that in his bonus. I do not understand the difference and am very excited to leave nonprofit once I get a new job. There are good ones out there but I’ve mostly experienced white savior leadership underpaying female employees and employees of color and gaslighting them when questioned. Doesn’t really align with what nonprofit should be about.

  46. Robin Ellacott*

    Could OP say in the exit interview “in my time here we kept losing good staff due to the pay being under market value, and I think it would be worth getting a consultant to look at all the salaries and budget to see if anything could be done about it”? Maybe even bring some data on market rates if that is viable?

    They might not follow through with looking into it, but this seems like one of those scenarios in which if anyone did actually look, the problem would be obvious.

  47. Nonprofitveteran*

    A few years ago I was working in a non-profit and there had been a pay freeze for years due to economic conditions – we all understood that, and didn’t grumble. I had just been promoted to a higher grade the year of the pay freeze, so I was worst off of all the employees at my grade: there were half a dozen of us.

    Come the day our CEO left, the new CEO job was advertised for, and it was being paid at the market rate – which meant the CEO would be being paid at a scale far, far above where we were being paid. Furthermore, we knew that the person most likely to get the CEO job was one of the employees at my grade in the organisation – we knew he was applying for it, we knew he was very likely to be the most-qualified applicant. So he would be jumped up a 40% pay rise – while the rest of us hadn’t had a payrise for five years and weren’t being offered one.

    I proposed a staff association to the other employees – we weren’t unionized, but I’d looked up employment law and found that we could agree to form a staff association and then negotiate a salary increase as a team. Only one holdout: a man, let’s call him Charlie, who had joined the organisation just after me but had started at the grade I had only just been promoted to. He had received all of the incremental yearly increases we normally got except in a pay freeze, so when the pay freeze happened, he was being paid at the top of his grade – and I was at the bottom: a fairly substantial difference in our pay. He didn’t want to be part of a staff association, he was the best-paid member of staff next to the almost-certainly-going-to-be-CEO, and he didn’t see any reason to rock the boat.

    But everyone else agreed, and I went to the board as the appointed representative of the staff association, made the case for a pay rise, and we got it. The board pointed out that unless funding were to increase this might mean redundancies in the future, but they took the point that the massive salary differential between CEO and staff would cause problems.

    The man-who-would-be-CEO got the job, and the salary: we all, including Charlie of course, got the pay increase I’d negotiated for: and approximately 15 months later… I was made redundant. Redundancies were supposed to be “consulted” on by the whole staff: in fact as I found when I sat down to my consultancy meeting at the end of the day, all the board and the CEO had consulted on was “should we make Nonprofitveteran redundant?”

    There was, obviously, no provable link between this and my formation of a staff association to negotiate for a salary increase well over a year ago.

    While I don’t think LW is obliged to mention the issue of this twice-market-rate salary in their exit interview, I do think that LW can do it safely, and no one else working there can do so.

  48. Raida*

    I’d check if there’s a Code Of Conduct for staff, see if there’s any requirement to raise ethical concerns, responsibility to spend the org’s money wisely in the service of the people it serves – that kind of thing.

    Then, since you do want to point this out but also want to avoid it, just state
    “According to section 2, subsection b of our code of conduct, I am required to [whatever matches]. ED’s publicly visible salary is one third of [org] budget. ED is the one that sets it, ED is the one that sets staff’s wages, staff wages are half market while ED is double. This is not in the service of the people we serve, this is not displaying ethical fiscal responsibility we are required to uphold. I don’t want to bring it up, it is not the reason I’m leaving, however I believe that I am required to raise this, even though I am uncomfortable doing so.”

    and if, after writing that little script out, you do feel that you believe in serving the people and you feel that you are duty bound to do this, then do it.
    I’ve done it, it’s not fun. But after a little research I found that I couldn’t not do it, and once I’d put myself in that position well full steam ahead. I either believe in the code of conduct and the service or I don’t.

  49. Guru*

    I don’t think there’s much here that’s egregious! Conscientious nonprofit employees should read 990s before accepting jobs – it’s very much a part of doing your research about the financial health of the organization you’re joining. But also, 990s for the year of the pandemic haven’t been filed or released on Guidestar yet, so isn’t it also possible that cuts were made in tax years that the OP isn’t seeing yet?

    And there’s *no chance* that the Board doesn’t know what the ED makes. They approve the budget. The President has to sign off on the 990, which discloses the ED’s salary – the President’s signature will be on the 990 itself. Evidently, they feel that this person is worth the amount they’re paying.

    OP’s exit interview would likely either be with the ED or a Board member – either way, I can’t imagine what they’d share that would be of interest with regard to the ED’s salary. Even if the exit interview were with an HR person, surely they also have access to salary information?

    1. Observer*

      Conscientious nonprofit employees should read 990s before accepting jobs – it’s very much a part of doing your research about the financial health of the organization you’re joining.

      And that makes it ok? People took lousy jobs because they were in a bad situation. Saying that the organization exploited people’s concerns over a bad job market is hardly a good defense. Nor is it going to do anything to convince good staff to stay or improve the morale or commitment of the people who have not left yet.

      And there’s *no chance* that the Board doesn’t know what the ED makes. They approve the budget. The President has to sign off on the 990, which discloses the ED’s salary – the President’s signature will be on the 990 itself. Evidently, they feel that this person is worth the amount they’re paying.

      This is true. And that is at the heart of the problem. The idea that it’s ok to pay staff half of market rate is bad. The idea that ONE person (even the ED) is worth 2x market rate is one that is rarely justified. The idea that the ED is worth 2x market rate, while the rest of the staff are only paid 1/2 market rate and necessary activities are not happening because those expenses cannot be met says that something is wrong with the Board. This is extremely bad financial and general management on the part of the Board.

  50. KittyKat*

    I’m infuriated on behalf of you and your co-workers, OP! I have worked for a number of non-profits and one was absolutely shocking in this exact regard. I am not in the US, but in the end, the bad executive behaviour (in terms of their own inflated salaries) was brought to a halt via a number of people, including clients, making complaints.

    Although it varies from country to country, it is often possible to make an anonymous complaint to various regulators about non-profits who are misappropriating or misusing funds, or even just not supplying a good return on investment for their funders. This applies whether the funding is government-based or comes from private industry or the public, or any combination.

    Again, depending on where you are, paying an ED double the going market rate can fall into any or all of the categories above. (Unless the non-profit can prove a reasonable case as to why this ED deserves such a salary.)

    You could also potentially make an anonymous complaint to any relevant tax authorities.

    Much of the above depends not only on which laws and policies apply in your jurisdiction, but also what type of business this non-profit actually conducts. For example, if it is a charity of some kind, or if it provides services relating to healthcare, education, social work, legal assistance, employment, policy, research and so on.

    If the non-profit is a registered charity or similar organisation, again depending on which country or region you are in, you can also make an anonymous complaint to external regulators, including the tax office.

    So these are some possible avenue for you, depending on which country and/or state or region you are in.

  51. not neurotypical*

    I’m a nonprofit ED. At the start of the pandemic, when it wasn’t clear how much this was going to hurt us, I proactively cut my already quite modest salary down to the bare minimum needed to cover my costs of living, just to make sure we had a cushion. Then, our highest paid salaried employee (who does have special skills as well as long tenure justifying that) came to tell me that, if donations dropped and we started to struggle, she wanted me to cut her salary before cutting hours or wages for any of the hourly workers. THEN the highest paid of the hourly workers came to me to tell me that if I needed to make any cuts, she would take the hit, “because I’m doing fine and I know that it would hurt some of them more to lose any hours.”

    I ended up not having to make any cuts (other than my own) and eventually brought myself back up to a less comically low salary, but my point is: That’s how it’s supposed to work at a nonprofit. Our highest paid employee is a specialist at doing the work, not an executive or a fundraiser. We all consider ourselves responsible for the well-being of the organization and for each other. Yes we deserve, and do earn, a living wage and plentiful PTO. But none of us would be able to live with ourselves if we were paying ourselves a lavish wage while work that could have been funded with that money goes undone.

    That’s what donors expect too: Unless explicitly told otherwise, they believe that their donations are funding the work itself, not bloated executive salaries. I don’t know whether OP would feel or be safe doing this, but I think that the BoD should hear more or less directly that this state of affairs is objectionable. It might also be useful to leak the salary situation within social networks populated by donors to or supporters of the cause served by this organization, with the hope that donors and grant-makers would begin asking questions.

    1. Mittens*

      Thank you for reminding me that my terrible non-profit ED is not the norm.

      You sound like an absolutely awesome and amazing ED!

  52. Anonymous Hippo*

    I’m not usually one to jump to this option, but this sounds unethical. I don’t know how the structure of NPs work, but I would be ASKANCE if I found out any nonprofit was operating like this.

  53. Andrea*

    Although Irresponsible, illegal and not in line with the organizational mission and vision, when I complained to a board about questionable fiscal management of an ED- I was brushed off and pretty much told they can hire a lawyer and claim that they were not aware. I have come to learn that questionable Leadership usually has its enablers from the top.

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