Anyone familiar with the nonprofit sector knows that fundraising for programming and operations is essential. Smaller nonprofits are especially lean, dedicating as much as they can to services rather than overhead, including salaries.
Focusing on the mission is essential, but compensation should always be fair. Regardless of the mission and the altruistic nature of the work, everyone has to purchase groceries, pay the rent and take care of medical expenses. That includes nonprofit leaders.
That said, compensation paid to leaders of larger nonprofits can be truly eye-popping, even in Maine. Take health care nonprofits. Take MaineHealth and Eastern Maine Healthcare Systems, in particular.
These organizations are complex. They have budgets in the billions. They have hundreds of employees. They have missions that involve life and death of the most vulnerable among us.
But 2020 tax filings for MaineHealth show that just six of the most highly compensated non-physician employees and/or trustees earned $6.3 million, with several individuals earning close to $2 million annually. Average salary, $1.05 million.
At Eastern Maine, the five highest earners were paid nearly $4.5 million in 2019, with one earning well over $1.5 million and several earning over $700,000 each. Average salary, $900,000.
Are these individuals providing top-quality leadership and management? No doubt. Again, the organizations that they manage are complex and vital to their communities.
But what would happen if, in a fit of conscience, these organizations paid each of their highest earners a maximum of $500,000? Surely we can agree that $500,000 is a respectable annual salary and that one can live comfortably, even lavishly, here in Maine on such a wage.
If each of these individuals earned “just” $500,000, it would result in a savings of about $3 million at MaineHealth, and about $2.5 million at Eastern Maine annually.
At MaineHealth, with revenues in excess of $2 billion in 2019, and with Eastern Maine’s revenues approaching $1 billion, such savings are little more than rounding errors. In organizations so large, it’s hard to argue that health care outcomes would improve dramatically if $3 million here and $2.5 million there were trimmed from the budgets.
But maybe it’s not so ridiculous to suggest that $3 million annually might be put to good use increasing wages for entry-level employees or for “less skilled” workers in the hospital who also have to buy food and pay rent. If you have a hundred such workers and you increase each of their salaries by, say, $10,000 annually, that’s just $1 million, and you’ve still got another $2 million left to spread around. It hardly needs to be said that $10,000 is a meaningful sum to a family trying to get by.
I can feel the pushback now: The “analysis” is simplistic and does not fully consider the extent to which these leadership positions are critical and deserve exceptional compensation.
Nonprofit board chairs insist that their organizations must be concerned with attracting and retaining top talent. Complex nonprofits like health care systems are competing nationally for the very best administrators. But a nonprofit’s board of directors, along with, perhaps, donors and public interest groups, are about the only individuals who can exert direct influence over the internal workings of an organization.
When a patient is admitted to a hospital, he or she doesn’t have the slightest inclination to consider medical economics. The patient isn’t concerned, at that moment, with issues of organizational or societal equity.
But those of us who have the luxury of looking at these issues while we are, thankfully, healthy enough to do so ought to feel that there’s something off about compensating a few individuals at levels 30 or 40 times what many employees earn.
Surely the care we receive from outstanding physicians, nurses and other medical professionals in Maine would not be compromised by considering the relative equities of health care system compensation.
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