The second of two parts on nonprofit compensation. In Sunday’s paper: While hospital profits are declining, pay for executives is soaring.
LOWELL — After going through three executive directors in five years, the board of the Greater Lowell Community Foundation was thrilled in December to bring Jay Linnehan on board.
A former member of the board himself, Linnehan came with convincing financial and leadership credentials from his time as executive vice president at Middlesex Community College and the pedigree of a respected Lowell family, to boot.
His skill set had earned him a salary of $178,000 in 2014 at MCC. He was preparing to take over a position that had paid out $82,448 the same year to the previous executive director.
“Instability is one of the things we’ve had to endure,” said Steven Joncas, co-vice president of the board of directors for the GLCF. “It’s difficult for organizations to find and retain talent, and I also think it’s becoming more difficult to fulfill their goals.”
Linnehan has previously declined to discuss his specific salary, which will become public in about a year’s time, but his hire encapsulates one of the most pressing problems charitable organizations face: balancing their nonprofit mission with the need to pay competitive rates to secure top talent.
In a 2015 survey conducted by the Nonprofit Finance Fund, the two most pressing challenges that organizations nationwide, and in Massachusetts specifically, reported facing were attaining long-term financial stability, and offering competitive enough pay to retain staff.
The number of nonprofit agencies competing locally for staff has more than doubled in the last 20 years. There were 4,962 active charitable organizations in Middlesex County in 2016, compared to 1,907 in 1995, according to the National Center for Charitable Statistics.
‘They could go anywhere’
“I think nonprofits are more aware of the need to offer fair salaries in order to retain talent,” said Vernetta Walker, vice president of BoardSource, an organization that advises boards of directors. “The folks running top nonprofits — they could go anywhere.”
Nonprofit leaders across Greater Lowell make six-figure salaries, according to the organizations’ tax returns from 2014, the most recent year for which most data on most groups is available.
They range from people like Naomi Prendergast, president and CEO of D’Youville Life and Wellness Community in Lowell, who made $223,725 while overseeing an array of organizations that employed more than 500 people and had revenues of nearly $30 million, to the heads of smaller groups, like Sam Schauerman of Billerica Access Television, who made $114,208 while overseeing 14 employees and revenue of about $900,000.
They include people who run ubiquitous organizations that touch thousands of Lowellians’ lives, like Karen Frederick of Community Teamwork Inc. Her salary was $130,902 in 2014. CTI employed more than 540 people that year and, with revenues of $81 million, was one of the largest nonprofit agencies of its kind in the state. It provides services ranging from heating assistance to early education and low-income housing.
Other top-compensated directors run highly specialized organizations of which many people may never have heard.
Michael Pappafagos of the Lighthouse School in Chelmsford, for example, had a salary of $267,065. Ronald Poltak made $163,387 while in charge of the Lowell-based New England Interstate Water Pollution Control Commission, a quasi-governmental agency in which employee salaries are tied, by law, to comparable positions in state government.
Misconceptions abound
Misconceptions abound about salaries at nonprofit agencies, watchdog groups say. People assume that nonprofits can be compared side by side based on their size, but the requirements and qualifications of executives vary widely. The director of a small organization may have much broader responsibilities than the director of a large group. Higher-education level is also a factor.
Salaries in the for-profit world are subject to the same whims, but unlike nonprofits, private corporations don’t have to disclose how much they pay top employees.
“The alternative perspective, which I think is the minority,” said Tom Pollak, director of the Urban Institute’s National Center for Charitable Statistics, “… is that people should be willing to work for significantly less — I would put it, to take a vow of moderation.”
In some cases, that can help a nonprofit agency.
“If the executive director of an organization has a modest salary, I think it’s a lot easier to attract these small donors than if you have a well-heeled executive living next to the bank president,” Pollack said.
By comparison, presidents of nonprofit banks based in Lowell took in salaries ranging from $205,227, like Align Credit Union’s Thomas Hammond, to $508,790, like Jeanne D’Arc Credit Union’s Mark Cochran.
And for many nonprofit groups, survival these days depends more on a savvy manager who can secure competitive grants and government contracts than on attracting small donors. Private donations make up about 10 percent of the funding for nonprofit agencies, said Rick Cohen, of the National Council of Nonprofits.
“Individual giving has rebounded a bit, but state and local governments are still in the midst of the recession and in the midst of budget problems,” Cohen said. “A good leader makes sure that the resources of that organization are deployed as effectively as possible. That’s part of why it’s important to get the right leader in and make sure you can keep that leader.”
Which is not to say that success at a nonprofit is dependent on a six-figure salary for the director.
Take the Merrimack Valley Food Bank, where Director Amy Pessia made $62,174 in 2014, or The Wish Project, which provides recently homeless people with basic necessities and where Director Donna Hunnewell made $42,811.
“We have a number of executive directors (in the region) who I know would have been doing much better if they were in the private sector,” said Patty Sullivan Talty, a political-science professor at UMass Lowell who also serves on the board of The Wish Project and several other local nonprofits.
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Highest 2014 nonprofit salaries in Greater Lowell, excluding hospitals and doctors
1. Michael Pappafagos President Lighthouse School $267,065
2. Naomi Prendergast President/CEO D’Youville Life and Wellness $223,725
3. Robert Young CFO Circle Home $192,325
4. Joseph DiFonzo Interim Executive Director Merrimack Education Center $182,919
5. Robert Finelli Executive Director Dig Safe System $173,736
6. Rachel Chaddock Executive Director Circle Home $165,070
7. Ronald Poltak Executive Director New England Interstate Water Pollution Control Commission $163,387
8. Dorcas Grigg-Saito Executive Director Lowell Community Health Center $161,078
9. Mark Altenweg CFO D’Youville Life and Wellness $150,769
10. Susan Sullivan Deputy Director New England Interstate Water Pollution Control Commission $149,491
11. James Cook Executive Director Lowell Development and Financial Corporation $147,123
12. Scott Bartis CFO Lighthouse School $146,058
13. Roy Nagy Executive Director Boys and Girls Club of Greater Billerica $134,471
14. Lisa McHatton Executive Director New England Trade Adjustment Assistance Center $134.272
15. Karen Frederick CEO Community Teamwork Inc. $130,902
16. Karen Ranieri COO Lighthouse School $127,998
17. Dorothy Castiglioni Director of Admin. Services Lighthouse School $125,898
18. Margaret Thibault Supervisor of Medical Services Lighthouse School $121,715
19. Lisa Mustapich Senior Director of Admin. Merrimack Education Center $120,843
20. Jean Phelps Executive Director LifeLinks Inc. $120,489
Source: Organizations’ forms 990
