Why do Well Intentioned Non-Profit Organizations Go Bad?

It happens too often. Successful and usually conservative or moderate, business leaders amass a fortune and decide to give some back to help our country and its people. The original goals of the nonprofit organization often involve nonpolitical charity, conservation of natural or cultural resources, and general benefits to America and its people. Within a generation of the founders’ death the nonprofit is usually changing rapidly in its move to a liberal philosophy, and by the time of the next generation the foundation has been completely dominated by extreme leftist radicals. Now, many of the nonprofit’s goals and purposes have morphed into radical, anti-American organizations with socialist or communist goals far different from the founder's intention. Moreover, the nonprofits are often deeply involved in radical leftist politics far beyond any political involvement of the founder's wishes.

Why does this happen so often. For example, why does the Ford foundation move left from helping all America’s poor to funding racists and anti-American organizations such as La Raza (“the Race”)? Why do nonprofits originally devoted to protecting wildlife habitats and conserving our natural resources become radical leftist advocacy groups generating a plethora of lawsuits in support of leftist politics? Why do organizations devoted to the welfare and humane treatment of animals wind up deeply involved in gun control and other leftist agendas? There are several reasons, but let’s start with the money.

Salaries of Nonprofit Executives

Nonprofit salary data are available, including a free demo package, at ERI.

Comparable, accurate statistics on government, private, and nonprofit salaries are hard to get. Each of these sectors has reason to hide and obfuscate their salaries and budgets. What is viewed as a benefit (and thus part of compensation) in one sector is not included in another sector. The information may be in the databases somewhere, but the intention of reporting these salaries is motivated by the law requiring them to report and the desire to make the required reports confusing and deceptive. For example, these sectors often report by size in revenues (here is the first deception, "revenues" often does not mean the same in the reporting requirements as they would to you and me). Nonprofits may report by categories of revenues of $1 million (small), $10 million (medium), and $100 million (large). Government statistics on private businesses may be reported as those making $300 million or less Medium), those making $1 to 2.5 billion (medium large), and those making $10 billion or more (large). The federal government lumps its salaries and benefits amounts for Senior Executive Service, Executive Schedule, and General Schedule. Given these odd ways of reporting, let’s look at some salary comparisons.

Nonprofits, Chief Operations Offer Compensation (salary plus benefits per year), 2009

Average over all nonprofits surveyed:
Small: $64,000. Medium: $111,000. Large: $193, 000
Range of salaries by category:
Least--Religion Related: Small: $54,000. Medium: $97,000. Large: $193,000
Most: Union Related: Small: $110,000. Medium: $165,000. Large: $248, 000


Federal Government, Executive Schedule (salary plus benefits per year), 1999

Interesting data on federal, private, and nonprofits are available here.

These data are about 10 years out of date. Assuming an average 3% per year increase, the 2009 estimates are presented below. One might go back and get actual year by year increases where possible, but the relative relationships would still hold. The objective here is not a precise salary comparison, but relative salary estimates to determine if pay is a leading draw of leftist radicals to work at nonprofits. Federal pay is determined by law, significant variations can be due to bonuses and other benefits not broken out in the database. The federal benefits package is more generous than in the private sector and I was unable to get detailed analyses of private vs. nonprofit benefits. Therefore, I use the basic salary plus benefits for federal employees. The figures for low, average and high are due to time in position, bonuses, etc.

Federal Executive Service Corrected to 2009

Low: $223,000. Average: $231,000. High: $237,000.

Private Sector Chief Executive Officer, Medium Sized Firms (salary plus benefits per year), 1999

These data are updated the same way as the federal salaries were, assuming a 3% per year increase.

Low: $326,000. Average: $988,000. High: $1,918,000.

Large Nonprofit Chief Executive Officer (salary plus benefits per year), 1999

These data are updated the same way as the federal salaries were, assuming a 3% per year increase.

Low: $171,000. Average: $285,000. High: $380,000.

Notice that the federal government estimates of large nonprofit CEO salary plus benefits are significantly larger than the “$100 million” data in the ERI database cited above. For example, even without adjustment for 1999 data to 2009 data, the average 1999 salary plus benefits of nonprofit CEOs is $212,000 compared with the ERI estimate of $193,000. in 2009. The federal government data are from the Congressional Budget Office (CBO), a non-partisan but agenda-driven agency. If the majority of Congress wants high or low numbers, then that is probably what they get from the CBO.

Summary of average salary plus benefits estimates

Nonprofit Chief Executive Officer: $193,000 to $285,000.
Government Executive Schedule: $231,000
Private Chief Executive Officers: $988,000.

Next, Lets Speculate on the Work Environment

It is harder to generalize at the Chief Executive Officer level than it is at the average worker level. Based on my first-hand observations the work effort and pressure is greatest in the private sector, followed by the government sector, and least in the nonprofit sector. If this is correct, then the above salary estimates generally follow this rank except that the nonprofit CEO’s may be somewhat better paid than the federal executives in terms of work effort and pressure.

Conclusion based on Salary plus Benefits.

The government and nonprofit salaries above are lower than the comparable private sector salaries. Therefore, I conclude the following:
1)Money is not the primary draw of leftist radicals to the nonprofit organizations.
2)My observations on level of work effort and job pressure may be a draw to both government and the nonprofit sectors because work effort and pressure are probably highest in the private sector.
3) Government agencies and nonprofits do not need to make a profit and thus their pressure to perform is generally less than in the private sector where lack of profits usually results in loss of jobs. Thus, job security may be a draw to government and nonprofit jobs.

Effects of Political and Social Beliefs

Leftist radicals, socialist, and communists all hate private industry and the concepts of profits and rewards for effort. They hate the idea (excepting themselves) that an individual who works harder and is more educated, capable, and dedicated should make more money than a less hard working, less educated, less capable, and less dedicated individual. It is not an overgeneralization to say that big government wants to regulate and control and that leftist radicals want to regulate and control. Their views on big government and social control and limitations of freedom are mutually supportive.

I conclude the following. Leftist radicals are drawn to nonprofits (they have learned that lawsuits and propaganda bring money and power and peer recognition) and somewhat less to big government, although under the leftist radical Obama that may be changing.

Other factors

Those who do not believe in capitalism, equal pay for equal work, and equal justice under the law are more likely to seek jobs that reward these beliefs, i.e. nonprofit and government jobs. Good pay, less work, the arrogance of do-gooders, power, and security seem to be the draw for leftist radicals to work and take over nonprofits.

Of course, there are exceptions. The scouting programs, Alcoholics Anonymous, The Salvation Army, and thousands of faith-based groups all are based on volunteerism and “living among the people you help”. I deeply appreciate and admire these kinds of nonprofits. The people involved in such nonprofit organizations give more than most of us. America needs many thousands more of them.

However, I believe that many nonprofits are out of control and do not deserve their tax exempt status. Hard earned taxpayer money should not be spent supporting organizations that seek to destroy freedom and individual responsibility; that are politically motivated, and seek to destroy America.