The Tribune Democrat, Johnstown, PA

May 12, 2013

Nonprofit exec pay examined

Report: Many make over $100G

John Finnerty
CNHI Harrisburg Bureau

HARRISBURG — Richard Bosserman has spent more than four decades turning a small workshop for the visually impaired into a $20 million operation making everything from mining equipment to insulation used in aircraft to the fluorescent vests worn by Department of Transportation road crews.

He runs his Cambria County nonprofit like a business and Bosserman gets paid like a business executive.

Bosserman is paid $434,978 a year, a legislative study found.

He is one of 910 nonprofit employees who make more than $200,000, an investigation by the Pennsylvania Budget and Finance Committee revealed.

Compensation for executives with nonprofits that provide state services has come under increased scrutiny as social agencies complain that the state is cutting funding.  Lawmakers last year commissioned a study to determine what kind of compensation was given to nonprofit executives.

Investigators found that more than half of the 662 nonprofits examined had at least one employee who is paid more than $100,000. In some respects, though, the findings were skewed.

They included data from hospitals that provide social services, so doctors and other hospital administrators are captured in the findings.

More than 300 of the non-profits examined by investigators had no employee earning more than $100,000.

“When you take out the hospitals, of 599 organizations, 21 percent had 1 (person making more than $100,000),” noted Sharon Ward, executive director of the Pennsylvania Budget and Policy Center in a blog entry that examined the study’s findings.

The study was commissioned in response to concerns most adamantly raised by House Appropriations Chairman William Adolph, R-Delaware.

Lawmakers have been concerned about ensuring that government dollars are getting to the people who are supposed to be receiving services rather than padding paychecks of executives, said Mike Stoll, a spokesman in Adolph’s office.

Pennsylvania is not alone in tackling this issue.

In Florida, lawmakers proposed setting a limit on executive pay of $129,972 for agencies that receive more than two-thirds of their budget through tax dollars, The Chronicle of Philanthropy reported.

In New York, the governor set a limit of $199,000 for executives at charities that receive public support. In New Jersey, nonprofit executives can make no more than $141,000 to do business with the state. New Jersey employs a sliding pay scale so that smaller nonprofits have a lower ceiling on executive compensation.

Philip Durgin, the executive director of the Pennsylvania Legislative Budget and Finance Committee, said the new study did not explore how much nonprofit agency revenue derives from tax dollars.

Durgin said that in many cases, executives with hefty paychecks may be getting paid based on the size of their total operations, while the state tax dollars only account for a small portion of their business.

That’s the case at Bosserman’s agency, the Cambria County Association for the Blind and Handicapped, he said.

At his workshop, the Department of Public Welfare payments only account for about 6 percent of total revenues, Bosserman said. At other small social service agencies, the DPW payments may account for more than three-quarters of the budget, Bosserman said.

Bosserman said that there are IRS guidelines that charities must follow when setting compensation for employees.

“We follow the rules,” Bosserman said. “We do that diligently.”

Bosserman said executive compensation only became an issue after the state ceased using the counties to funnel money to nonprofits.

“It’s political,” Bosserman said. “We employ people who can’t work anyplace else. Now the state is saying, don’t spend as much money. It’s been a real shootout.”

It is too soon to say whether any policy changes will come out of the study’s findings, Stoll said.  The data “helps the whole conversation,” he said.

One thing that is immediately apparent is that there are nonprofits that are doing important work with employees who are being paid modestly.

“There are a lot who are doing it right,” Stoll said.

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