Apropos to my post dealing with doing more with less earlier this week, last week Janet Brown, CEO & President of Grantmakers in the Arts wrote about the problems with non-profit CEOs forgoing pay.
She cites an example where the retiring CEO of a performing arts center had only accepted a nominal salary. The savings that represented meant the different between running a deficit. Now with the CEO retiring, they either needed to find someone else who was willing to do the job for free or find the money to pay someone for the job.
The performing arts center should have been booking the CEO’s non-salary as an in-kind contribution all these years, keeping the reality of the expense in the budget. This, of course, would have shown a loss for some years, which (I’m only guessing here) is probably not what the CEO or the Board wanted. So the cycle of under-capitalization continues.
Brown asserts that every organization should strive to be completely transparent financially, not only for the sake of those who inherit leadership positions, but also to retain the confidence of supporters.
Sound business practices are possible in nonprofits but, as I’ve stated before, this demands transparency and leadership that wants to do more than keep the doors open….Our investors in the nonprofit arts world are community members, governments, foundations and corporations who give money because they believe in our organizations, their missions and the good they are doing for our communities. These investors also deserve (and should demand) returns, which include the best artistic product possible and the strongest balance sheet good management can provide.
I guess the lesson here is not to pay your executive director as well as your interns, erm I mean, pay them both!