How the Chronicle Conducted Its Annual Survey of Pay at Big Nonprofit Groups

The Chronicle‘s 13th annual salary survey examines what the nation’s largest nonprofit organizations pay their top officials. This year’s survey gathered data from 313 charities and foundations.

The organizations asked to participate in the survey are those that ranked highest in their categories on the 2004 Philanthropy 400, The Chronicle‘s annual list of the charities that raise the most money from private sources.

Several charities that were not included on last year’s Philanthropy 400 were also asked to provide information because, in some categories, only a handful of organizations raised enough to make the list.

For example, only 12 environmental and animal-welfare groups were large enough for inclusion on last year’s Philanthropy 400, while 15 such groups were included in this year’s salary survey. Charities added to this year’s compensation survey were those that raised the next-highest amounts after those included in the 400 list.

In addition, The Chronicle requested compensation figures for the 50 wealthiest private foundations as determined by The Chronicle‘s annual survey of grant makers. The 20 wealthiest operating foundations according to the records of the Foundation Center, in New York, and the 15 community foundations that raised the most last year according to rankings by the Columbus Foundation, in Ohio, were also asked to participate in this year’s salary survey.

Officials at all of the nonprofit organizations were asked to fill out a survey and provide supporting information from their Forms 990 or, for operating and private foundations, Forms 990-PF, informational tax returns that charities and foundations are required to file with the Internal Revenue Service each year.

Nonprofit organizations are required to tell the IRS about the compensation provided to their directors, trustees, and key officials and their five highest-paid officials.

The organizations in the survey were asked to provide information for the 2004 fiscal year — or, if their fiscal years ended in January, February, or March, for 2005.

Some 201 organizations provided breakdowns for compensation, benefits, and expenses for top officials or verified information The Chronicle culled from the organizations’ informational tax returns. The remaining organizations simply provided their annual tax returns to The Chronicle.

Top Officials

The survey sought information about each organization’s chief executive and the employee other than the chief executive whose compensation was the highest. The Chronicle also asked organizations to provide information about the employee whose regular compensation was the highest at the organization, and not inflated by a one-time payment, such as a severance or pension payout.

Seventy-seven organizations in the survey received permission from the Internal Revenue Service to delay filing their informational tax returns for the 2004 or 2005 fiscal year.

However, 38 of those organizations provided their most current compensation information. Figures provided for the other 39 groups were based on either 2003 or 2004 data.

To determine the highest paid official other than the top executive at the organizations surveyed, The Chronicle added together compensation, benefits, and expenses figures to decide whose entire compensation package was worth the most.

Reporting Requirements

Three religious groups — the Catholic Foreign Mission Society of America (Maryknoll Fathers and Brothers), St. Labre Indian School, and Wesleyan Church — declined to provide information. Religious organizations do not have to file informational returns with the IRS, but seven religious organizations did provide compensation data for the Chronicle survey.

The survey form asked for breakdowns of the financial data reported on the Form 990. The breakdowns show how charities report deferred compensation, pensions, housing allowances, and other payments to top officials. The Chronicle’s tables show the breakdowns of bonuses, deferred compensation, housing allowances, and other payments when that information was provided by organizations. Some organizations provide these details on their informational returns, but they are not required to do so.

Readers of the survey should take care when comparing one organization’s reported compensation totals to others included in the survey.

Reporting standards set forth by the IRS require organizations to report all take-home pay in a fiscal year. Sometimes this includes significant retirement payouts for executives or relocation payments for new executives. Also, the IRS requires organizations to report the value of retirement or severance packages, even if the sums have not been paid in that fiscal year.

Small Groups

Although the salary survey shows what many top nonprofit officials earn, it does not necessarily include all of the highest earners. Some smaller, less-wealthy nonprofit groups that were not included in the survey may pay their executives more money. Some large organizations were not included on the Philanthropy 400 because they raise little from private sources.

Some organizations had just one employee who was paid a salary; one group had more than one employee who made the same salary.

The Horace W. Goldsmith Foundation listed five officials, rather than two, because the five top executives all have the same title and make the same salary.

Four organizations — the American-Nicaraguan Foundation, Campus Crusade for Christ International, the Michael and Susan Dell Foundation, and Lutheran Services in America — did not provide the salary for a second executive other than the director.

The Chronicle‘s salary survey was compiled by Leah Kerkman and Cassie J. Moore, with assistance from Maria Di Mento.