[pc86]

Having a highly paid executive (even multiple) doesn't make a non-profit "terrible." People deserve to be compensated for their work and you'll have a hard time arguing that running a large non-profit successfully isn't challenging, demanding, and deserving of good compensation.

[wpietri]

It isn't necessarily so, but there's a correlation. A lot of terrible nonprofits are excellent at funneling money to execs.

A lot of the work at nonprofits is challenging and demanding. Everybody deserves good compensation. But as with large for-profit companies, it's often only executives who get that. Take a look at CEO compensation over the decades. It has risen massively compared with worker pay: https://www.epi.org/publication/ceo-compensation-2018/

Maybe CEOs have gotten 940% better at CEOing in the last 40 years. But I think the more likely answer is executives have gotten much better at skimming a larger slice of pie.

One could argue that if investors want to grossly overpay for-profit execs, that's between the investors and the execs. But that's definitely not true in not for profits, which get all sorts of legal and social leeway because they're in theory doing good for society.

So yes, it's fair to argue that having very highly paid executives in a non-profit is terrible. Does that mean execs who are in it for the money will stick with fleecing investors? Probably. But I'd say that's better for the nonprofits, as then they're likely to end up with people who are there for the mission.

[mattferderer]

Unfortunately this is not just a non-profit issue. This is an everyone issue.

One popular trending reason is that boards ask an outside firm what an average CEO makes at a similar size company. Then they decide to pay them slightly above average if they like them. Over 40 years this tends to sky rocket the salary of CEOs to where everyone wants an MBA just so they can get paid crazy amounts of work compared to what they put.

Of course the salary of the CEO doesn't even tell the whole story when you bring in tax perks of shares vs W-2 wages. Plus the CEO will probably get many other company "perks".

[wpietri]

Oh, sure, I think it's also terrible in for-profit companies. I think it's a source of vast economic inefficiency. But the usual excuses for it don't apply at nonprofits.

[narraturgy]

I disagree. It seems unreasonable to hold not-for-profits to such an extreme ethical standard. They're already doing charitable work, why must they also be expected to lead the charge on unrelated social matters besides the one they chose?

I agree that executives are paid too much, but I don't expect a Soup Kitchen to be posting on social media about how they are fighting against discrimination of purple elephantfolk in Norway.

[wpietri]

Because not-for-profits, which have special legal and tax treatment on the theory they're doing good for society, are accountable for how they spend money in ways that for-profit companies aren't.

I also think it's hilarious that "don't overpay executives and instead spend the money on the good you're supposed to be doing" is an "extreme ethical standard". How did the Overton Window get moved all the way to the basement?

[mattferderer]

It's not just executives though. It's all staff. It's hard for a lot of people to take rather huge pay cuts to work at a non-profit.

Very few people at non-profits are "overpaid" when compared to salaries at a similar for profit company. Non-profits also have less tools available to pay their employees, such as stocks.

[username90]

If their executives get paid above their level of competence then the nonprofit is no longer nonprofit, it just distributes the profits via executive salaries.

[mattferderer]

This needs to be said more often! Having worked at & with many non-profits, if you don't have competitive wages your top talent keeps leaving. That crushes small non-profits because top talent wear multiple hats & are very difficult to replace. Anyone who has had to replace talent knows the pain of having to hire & then get a new person up to speed.

As for marketing, spending lots of money on marketing isn't bad as long as it's working.

People need to quit judging non-profits just by looking at 2 numbers without understanding the entire scope. This is a huge issue for non-profits.

I know of non-profits that have been forced to setup multiple entities. One for "public" where they can say 100% of donations go to the cause & one for people who understand running a business where they can get private donations that help pay people salaries, building expenses & everything else.

[murgindrag]

In abstract, no. In practice, in this case, yes. This was an odd way of channeling money into private pockets of well-connected people at MIT.

Anyone know of a good way to reach a good investigative reporter?

[clintonb]

I worked at edX for a few years as an engineer, but left 3.5 years ago.

There isn't much of a story here. Of the top 10 officers listed on page 7 of the 990, only two—Anant and Adam—work directly for edX. The directors are MIT or Harvard employees.

This transfer values edX, Inc. at $800M. Would anyone be complaining if the board and execs of a for-profit near-unicorn made $500K-$1M per year? I highly doubt it.

[murgindrag]

Indeed. And Clinton, let me ask you. What was your opinion of Anant?

Did he seem honest? Did he seem to care about the not-for-profit mission? Did the employees respect him? Or did he seem like a sleazy used car salesman?

If Anant were a highly-skilled, qualified executive acting in the interests of edX, I might have no problem with a high salary. Did Anant seem like that to you?

Did the teaching-and-learning on edX advance or regress since the MITx days? The focus on equity? The technology platform?

Did edX lead to major research breakthroughs? Did it impact the developing world?

And for that matter, how many URMs worked there? Were there leaders who had any knowledge of how less affluent people lived or who to build a platform for them?

Part of the reason lower compensation packages make sense is that people who care about initiatives like edX usually don't do it for the money. Paying Anant a megabuck a year exactly selected for the type of executive who worked his butt off to maximizes quarterly bonuses, rather than mission or long-term.

MIT and Harvard's top asset is in brand equity. Did you feel like the $800M -- let's call it $400M each -- which will in effect add 1% to Harvard's endowment and 2% to MIT's -- is worth the reputation hit?