WHICH CHARITY BOSSES EARN THEIR KEEP One in five top executives at America's biggest charities gets more than $200,000 a year. Here's how to determine which ones deserve what they receive -- and which ones do not.
By Marguerite T. Smith Reporter associate: Ellen Stark

(MONEY Magazine) – Once you might have reasonably assumed that money you gave to a highly respected charity would be well spent. No longer. In February, the United Way of America, whose 2,100 chapters raised $3.1 billion from 31 million people in 1990, admitted that it paid its president, William Aramony, annual salary and benefits totaling $463,000 -- plus lavish perks such as flights on the Concorde and chauffeured limos. That made Aramony the best-paid charity executive in the U.S. In short order, a chorus of complaints by angry donors forced Aramony to resign from the country's largest charity. And last month, an internal United Way audit provided even more distressing details: $40,700 for Concorde tickets; $92,265 for Aramony's chauffeurs; and a $2 million loan to a for- profit spin-off merchandising company run by his son Robert. Aramony has called much of the report ''absolute, unequivocal lies.'' The United Way scandal has raised disturbing questions about major charities in general, including those on MONEY's list of the 100 biggest charities, which we publish each December. How many other charity chiefs earn six-figure salaries? How many of them deserve their high pay? And, above all, how can you be sure the charities you support aren't squandering money on overpaid executives? Clearly, many charity leaders earn their keep, efficiently running multimillion-dollar groups that are as complex as any large corporation. Still, ''when compensation becomes too rich, you attract mercenaries instead of missionaries,'' notes Michael Josephson, a Los Angeles ethicist who consults for corporations and government agencies. Josephson sets the upper limit for reasonable pay for charity chiefs at $150,000 to $200,000. (Leaders of national groups typically earn about $150,000, but the 10 highest-paid charity execs average $277,050. See the table on page 144.) To find out what the leaders of major charities actually earn, MONEY surveyed the 100 biggest charities as determined by the NonProfit Times, a monthly trade newspaper. (The United Way isn't on the list because the group does not compile nationwide audited data for its chapters.) We asked each group to send us its most recent Form 990, which must be filed annually with the Internal Revenue Service by all nonreligious charities with income of more than $25,000. The form, which lists executive salaries, is open to public inspection. Of the 100 charities, 75 promptly mailed us their 990s. But by accident or design, seven groups omitted the pages that list salary information. Six of them supplied the figures after a follow-up phone call or two -- or four, in Hadassah's case. But the seventh, the Braille Institute, joined eight others that refused to mail us the forms. These groups required MONEY reporters to visit them personally to get the data. As you might have guessed, salaries at most of these nine were on the high side, with leaders at four (the Boy Scouts of America, City of Hope, the Population Council and United Jewish Appeal) earning more than $200,000. Overall, the pay levels at the 100 charities varied enormously. The chiefs of 22 received more than $200,000 in salary and benefits (in 1990 or 1991, depending on the figures available). Best paid: Sanford Shapero, 63, who earned $353,726 in pay and benefits as president of City of Hope, a hospital and research center with 1990 income of $157.2 million. The reason, says Richard Ziman, City of Hope's chairman, is that Shapero serves as chief executive of ''multiple entities.'' Says Ziman: ''His responsibilities encompass the direction of a medical center, a research institute and a fund- raising organization of more than 450 chapters.'' At the other extreme, 29 charity executives earned less than $100,000. Lowest paid, excluding charities led by volunteers: Millard Fuller, who got a mere $14,235 as president of Habitat for Humanity International. Based in Americus, Ga., the group, whose volunteers include former President Jimmy Carter, raised $20.6 million in 1990 and built 3,300 low-income housing units worldwide. Our survey found no pattern to pay and benefits -- even among charities of roughly similar sizes and purposes. For example, the $103 million Christian Children's Fund paid executive director Paul McCleary $128,077 in 1991, or 0.12% of its income. James Bausch, president of the $98.7 million Save the Children Federation, earned $301,672, a hefty 0.31% of the group's revenues. ''To assure that Save the Children is well managed, it must offer competitive salaries,'' says a spokesman. How do those salaries compare with compensation in the business world? They are roughly half what top executives of major firms with sales of $100 million or more generally earn running organizations with similar revenues -- and ( that's before counting stock options and other perks. At the same time, Big Charity appears to be aping Big Business in one way. Pay for performance, once considered slightly unseemly in the nonprofit world, is catching on. Today, some charity chief executives can expect annual bonuses of 15% to 40% of their base salaries for meeting prescribed goals. How can you tell if your favorite charity's leader is being overpaid? (Unfortunately, barring a highly publicized scandal such as the United Way's, there is no way to find out about potential conflicts of interest.) For pay data, you can start by looking at how well the group is doing its job. Two benchmarks: 1) whether the charity meets the standards of the two watchdog agencies, the National Charities Information Bureau and the Philanthropic Advisory Service of the Council of Better Business Bureaus, and 2) whether at least 65% of the charity's income went for program expenses, rather than to fund-raising and other costs. MONEY's annual article on charities reports on both yardsticks. You can also get the information by just writing to the charity. Next, get the group's most recent compensation figures from its Form 990, which you'll want to compare with the average pay at similar-size charities. A 1987 federal law requires the organization to show you the form on request. You don't need the entire document. The critical parts are these: page 1, which has a summary of the charity's income and expenses; part V on page 4, which lists salary and benefits for all officers, directors and trustees; and part I of Schedule A, which reports the pay for the five best-paid employees. When you order a 990 by mail, you may be charged postage and a copying fee as high as $1 a page. You have the right to see the organization's three most recent 990s -- complete with salary data -- if you visit the charity's headquarters or a regional office staffed by three or more employees. (One possible hitch: If the regional group files a 990 of its own, as happens in more than half the cases, it probably won't have the 990 for the parent organization. Thus to see the Boy Scouts' 990, you must visit its Irving, Texas headquarters.) Alternatively, you can ask your state's agency that regulates charities for pay data. About 40 states require all charities that raise money within their borders to file financial information with state agencies. If you're willing to wait four to six weeks, you can get it all from the IRS. Call the IRS . hotline (800-829-1040) for the address of its office nearest you. Then write to the disclosure officer, requesting the 990. The IRS will bill you $1 for one page and 15 cents for each additional page. Be sure to use the charity's official name. The ALSAC/St. Jude Children's Research Hospital, for example, files its 990 as the American Lebanese Syrian Associated Charities. Telephone the charity for this information. Once you have all the figures you need, compare the charity executive's pay to the size of the group. A 1991 study by benefits consultants TPF&C in Rosslyn, Va. found the median pay for executive directors to be: -- $83,500 at nonprofits with less than $1 million in income -- $95,000 for incomes of $1 million to $1.9 million -- $125,000 for incomes of $2 million to $4.9 million -- $140,000 for incomes of $5 million to $9.9 million -- $160,000 for incomes of $10 million to $19.9 million and -- $185,000 for incomes over $19.9 million If you're thinking of giving money to a charity that pays its boss much more than these norms, ask a public affairs officer for an explanation. The answer may lie in the nature of the charity's mission. If a charity functions primarily as a middleman, handing out funds to other groups that actually do the research, feed the poor or provide therapy, the leader is typically paid less than if the charity itself provides such services. For instance, John Graham IV, the head of the American Diabetes Association, made $140,128 in salary and benefits in 1991, or 0.22% of the ADA's $65 million income. Kenneth Quickel, the leader of the Joslin Diabetes Center, earned 98% more -- $277,289, or 0.89% of the group's $31.2 million income. All the effort that's required to check out charities strikes many experts as outrageous. For any lawmaker interested in sponsoring reform legislation, ethicist Michael Josephson has a suggestion: ''Charities should just be required to print all six-figure salaries on a piece of paper and send it to whoever asks.'' That sure sounds sensible.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THESE BIG CHARITIES GIVE TO THE BOSS TOO The heads of national charities typically earn about $150,000. But the 10 best-paid executives among the men and women who run America's 100 biggest charities beat that average by 58% to 135%. Excellent leaders may be worth extraordinary sums, of course. Seven of these top 10 groups seem to operate quite efficiently, spending more than 75% of the money they raised on good works rather than on administrative or fund-raising expenses. And note that the United Jewish Appeal devoted 96.2% of its income to programs. Except where shown, data are for 1990.