[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.