Expensive CEO’s of charities

January 31, 2010 | By | 4 Replies More

How can one really justify a salary of $1 Million to run a charity? Consider the case of Brian A. Gallagher, who is paid $1,037,140 to run The United Way. Or consider the American Red Cross, which pays its top person, Gail J. McGovern, $495,187 per year.  These are stats from 2009 provided by Forbes.

Here’s how you fix this problem:  Pass a law to make all charities disclose the salaries of its top ten highest earning officers and employees on all solicitations for donations.

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Category: Altruism, American Culture, Fraud

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

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  1. Niklaus Pfirsig says:

    I doubt that such legislation would get much support. Many "Charitable" foundations provide very useful functions for corporations.

    In addition to providing tax shelters for corporations and the very wealthy, many of these foundations funnel the lion's share of thee donations they receive into political think-tanks (a.k.a. "Policy Institutes") that inturn are a key part of the lobbying process.

    Take a little time to browse the list of US examples at this page.

  2. Lone Ranger says:

    I agree that it's a lot of money, but note that he runs a $3.8 billion organization. The question is how does this salary compare with those of CEOs of private corporations at the same level. Even the United Way does not run itself.

    • Erich Vieth says:

      Lone Ranger. I agree that it is quite a commitment to run a big charity. But it is, after all, a CHARITY. If one truly believes in the mission, why does one need to soak up so many of the donations for one's personal gain. Why does anyone need to be paid more than $100,000/year if one is fully committed to the cause?

      I would think that many people would redirect their money to more efficient charities (many of them local charities) if only they knew of the big bucks that were going to the upper management of the brand name charities. Hence my suggestion that people should be allowed to give money to any alleged charitable organization, but I would insist that the salaries and benefits of the ten highest earning members of upper management be included as part of any solicitation. Let potential donors decide for themselves, once they are fully informed.

  3. Erika Price says:

    Erich: I suppose these charities would justify these salaries the same way the companies that received bailout money justified their CEO payments/bonuses. We need top-tier help to run our business/charity; such talent can only be bought with massive, competitive sums. I'm not sure whether I buy that argument or not. But that's because I'm not sure how vital a hot-shot CEO really is.

    Regardless, I think the most useful statistic in informing donations is the percentage of donations that actually reach the people who need it. CEO salaries could also inform donors, however. Hopefully the same market forces that drive up CEO salaries would also drive funds away from lackluster, wasteful charities.

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