CEO's, charities and private members' bills

A couple of days ago,  there was an unbelievable post in the Globe and Mail.   I am sputtering with a kind of rage after reading it, although daily the mainstream press does make me rage or cry.

The Globe piece was written in response to a private member's bill that sets out to limit the salaries of CEO's of charities.  I don't know what drove the member to introduce the bill, but it seems reasonable to me, although it might have been good to include something about minimum salaries because too many people in the sector make way too little money!

It is the case that everyone pays a portion of these salaries since charities pay NO taxes - so there does need to be a public good in the work that they do, and the public should be benefiting from their work.  The federal government registers charities and gives them numbers so that they can in turn, give out charitable receipts for the donations,  so that people do NOT pay taxes on the money that they donate (or at least it has a tax benefit - not $1 -$1 depending on how much you donate and your income.)

So the federal government on behalf of Canadians, gives out the numbers and set out rules for charities about how much you can spend on administration,  and how you have to report,  and how quickly you must spend the donated money etc.  (It is a complex system and people without MBA's and law degrees figure it out every year. )   Anyway the private members bill, for good reason wants to limit the salaries of charities to no more than $250,000 per year.  Now given that amount  is 5X the average salary of a Canadian that seems like it should attract sufficient "talent". . .   As far as I can see, to make big money,  you just have to not care - and to take the lesser dollars one has to care about the work and not the income.   I mean $100,000 a year is in the top 5% of income earners in this country - 250,0000 is in the top 1-2% . . . we really cannot find the talent to run a charity (even a big one) in 95-98% of the working population?

The article says in part:

But what if, in fact, we’re actually hurting the needy by restricting charity salaries? What if it is the case – as it is with most of the rest of the economic world – that when you increase the amount of money you are willing to pay, you can recruit from a better talent pool, and if you recruit from a better talent pool, you can get leaders who can increase the amount of money being raised for the needy?

What we don’t realize is that the kinds of restrictions being proposed have a powerful negative effect. They create stark, mutually exclusive choices between doing well and doing good for the brightest young minds coming out of our best universities, law schools and business schools. As a result, tens of thousands of them – any one of whom might have made an enormous difference fighting social problems – march directly into the for-profit sector each year without even considering a career in charity, because they are unwilling to make the kind of lifelong economic sacrifice that the charity ethic requires of them. Their talents are lost to the needy forever and gained for a lifetime by the marketers of Budweiser, BMW and Botox. How is that smart? 

 Because I can see the heads nodding, I felt compelled to explain why this is so misguided.

I would like to see data, applying to non-profits and charities that suggests that "when you increase the amount of money you are willing to pay, you can recruit from a better talent pool, and if you recruit from a better talent pool, you can get leaders who can increase the amount of money being raised for the needy?"

All those people that are only out for their own benefit, who go where their income can be maximized, they are a better talent pool for the charity sector?  This may be great for the "Capital Casino" that  these folks normally work in, and they may be smart enough to run a charity, but I fail to see the connection.  There is some magic about $250,000 to get the best and most committed?   If you get more talent, you get better leaders?   Of course being a talented money maker/manager makes you great at running a charity because it is just like the "capital casino" - it is just like the captains of industry to want to "increase the amount of money raised for the "needy"!  For the Needy?   What year is this? This smacks of improving life for those in the poor house.   You know what else? Those charities that pay the big bucks - hospitals and universities are at the top of the list are hardly for the needy -- charities for the so-called needy - we are talking the Elizabeth Fry and John Howard Societies, the drop in's for the mentally ill, the Oxfam's and Care and Service Canada. . . for the 70% of the world even worse off than poor Canadians.    Will increasing their CEO's salary really get better talent that can raise more money?   Maybe,  but only because they are better connected to the money already!  And I will take THAT into consideration,  (always hire rich people to raise money as they can make their rich friends donate in larger numbers than I can) but more "talent"? - not on your life.

Imagine the talent that it takes to run an operation on a shoe strong, so that all the money can go to "clients and services";  where you have to worry about the number of photocopies that you are using; or making sure that you keep enough money in the bank,  after providing service,  to make payroll every two weeks; where you have to worry about your administration costs as a percentage of your income,  because you don't have an organization like a University or a hospital that has a separate "foundation" that raises the money so that all that University and hospital admin is covered not by the charity dollars but by the hospital or university. . .  yup we really need those financial cowboys to be running the charities of the country.

Last thing about salaries - somehow the author of this article keeps stating that people shouldn't have to make "financial sacrifices" in order to do charitable work -  and I agree - but let's lift all those folks making $25-45,000 per year up - let's have them earn in the $60-80,000 range - CEO's? they can make up to $100,000 or,  as the Bill's author suggests - $250,000.   Who, is making a financial sacrifice at $250,000/year?  More than double, nearly triple,  the average family income in Canada.

You know what else, there is more that is wrong with "charities". . . the charities in this country were once advocates for the poor,  and if you like,  "needy" - but that is no longer allowed.  If you want to advocate for the poor, a change in legislation, an increase in benefit,  or a change in taxes - you better not be doing it as a charity.  So, these days my money  goes to organizations that advocate and educate but cannot get charitable status - the CCPA, the Media Coop(The Dominion), Rabble and Straight Goods, Greenpeace.    (Well OK I gave money for Pakistan, and a couple of friends were raising money for the Stephen Lewis Foundation and N.S. Gambia and well OK - I am loose with my bucks, and I carry change to give away on the street)  I certainly don't think that immediately, everyone should do this - especially when it comes to charities that work on Int'l Development but. . .

I have a suggestion - lets not have this discussion about how much to pay the Charity CEO's - lets have a progressive tax system where the rich and the corporations pay their share; lets have a decent guaranteed annual income, use tax dollars to provide needed services,  and use our charity dollars to try and eliminate the $2.00 divide. (70%+ of the world lives on less than $2.00 a day)  That will eliminate a need for six figure salaries for those running "charities" altogether, we can just eliminate the need for the work.