Nonprofits' Executive Pay Should Be More Accessible

Most nonprofit hospitals don't readily reveal the salaries and compensation packages of their top executives to public scrutiny. That information is not on their Websites, and it's usually not in those glossy – and often irrelevant – community benefit reports that are long on portrait photographs, architectural designs, and colored pie charts, but short on detail.

They're not hiding the compensation, of course. They can't. That information is on the Form 990 filings that nonprofits submit to the Internal Revenue Service, which are easily accessible on GuideStar. But there is always a significant lag time in those filings, and much of the public may not be aware of how to access that data anyway.
Last week, for example, Rhode Island nonprofit Care New England declined news media requests to detail the compensation package for its new CEO Dennis Keefe. CNE spokeswoman May Kernan told a Providence, RI television station and later HealthLeaders Media that it was the three-hospital health system's "policy" to provide executive compensation information through the 990 reports.

I respectfully suggest that the policy be changed.

These are rough times for a lot of people. Unemployment hovers at nearly 10% for many sectors of the economy outside of healthcare and even in hospitals, there appear to be almost daily notices of layoffs. For workers everywhere, salaries are stagnant and healthcare inflation eats away at any marginal salary gains. It is not unreasonable to expect that nonprofit hospitals that receive significant tax breaks would be willing to share the compensation information on their top executives on a real-time basis.

Here's a more practical reason: The issue of executive compensation is not going away, and it's always better to ride the wave than risk the undertow. Executive compensation and the widening prosperity gap between the few at the top and everybody else are hot topics. So hot that the Los Angeles Times won a Pulitzer Prize in April for its coverage of outrageous salaries paid to city officials in Bell, CA.

That investigation broadened and led to the finding that three California hospital district CEOs were among the highest paid public workers in that state. Both stories got a lot of play, and assuredly did not go unnoticed by just about every assignment editor at every news outlet in the nation. 

This is not to suggest that hospital executives aren't worth the compensation they're getting. Some probably aren't, but most are, and more than a few are probably underpaid. But it's hard to say either way when we don't have the information readily at hand. If you're a six-figure CEO, and you feel that you earn your keep, why not explain it to the public you serve? If you're uncomfortable justifying your compensation, maybe it can't be justified.

The fact is, when the compensation is put in its proper context, a few curmudgeons will still howl and write letters to the editor. They always do. But most people will understand a reasoned and honest explanation. Health systems and hospitals are huge, complicated, labor- and capital-intensive operations that require not only highly skilled professional oversight for complex day-to-day operations, but visionary thinking for strategic planning.

Bottom line: It's a question of trust. It's a hard sell if you want the community, and taxpayers at large who subsidize non-profit healthcare through tax breaks, to buy into your healing mission when you're not willing to say up front what the people at the top are paid.