Willamette Week| News| Business

Despite an increasingly noisy world, one familiar sound is managing to rise above the din: the tireless symphony of bell-ringing Salvation Army volunteers. The Salvation Army is not alone; it seems everywhere you turn there's another charitable organization asking for a donation. Apparently the hard work is paying off.

Many large nonprofit organizations are generating more revenue than ever. Oregon's nonprofits accumulated nearly $6 billion in revenues in 1996. When the 1997 reports are finally tallied next May at the attorney general's office, they're likely to break the $6 billion mark.

As charities become bigger business, questions on how to negotiate this new economic terrain will invariably arise. The question of what to pay a nonprofit chief executive officer lies at the heart of the matter.

Since taking over as president and CEO of Goodwill Industries of the Columbia Willamette in 1986, Michael Miller has been largely responsible for increasing his organization's total revenues from $6.4 million in his first year to $36.06 million in 1996. The Portland-area Goodwill, which consists of 19 stores, currently makes the most money of the 187 Goodwill units in North America.

The Portland-area Goodwill has another distinction. Miller's salary and benefits package totaled $446,483 last year--more than twice the compensation given to the top executives at the local outposts of United Way, the Salvation Army and St. Vincent de Paul (see box below).

Although some people may look askance at Miller's pay, WW was unable to find anyone in the nonprofit business who would publicly challenge his salary. His boss says Miller earns every cent.

"The numbers are scary in this marketplace right now, but we have to compensate Michael competitively given what the marketplace demands," says Tom Young, chairman of the board of directors for Portland's Goodwill unit. "People working in nonprofit are not indentured servants; they can go to Microsoft, Boeing or wherever and make a lot more money."

Miller, who has worked for Goodwill Industries International since 1975, says he's not going anywhere.

"The truth is I'm contacted from time to time by other companies, but I am fully dedicated to Goodwill," Miller says.

Nonprofits are at a crucial juncture: They are being asked more and more to augment a reduced welfare system, requiring particularly skilled management. Meanwhile, they must justify increasing management costs to a skeptical public.

Pat Read, president of the National Council of Nonprofit Associations based in Denver, Co., believes nonprofit success is contingent upon the abilities of top officials.

"Without well-run administrations, these large nonprofits can't operate," she says.

Still, the idea that anyone working in nonprofits makes as much as Miller does runs antipodal to the instinctive definition of "not for profit."

"People are always going to have different ideas about how we should pay our president," says York Haines, vice president of communications for Portland's United Way. "To some people $30,000 is probably too much. But the real question is: Where does my dollar go? That's what people have to ask themselves."

According to Oregon's attorney general's office, nonprofit organizations that filed reports for 1996 used an average of 76 cents of every dollar for programs and services. The rest went toward management salaries and various other operating expenses--or "indirect costs" as they are known in the industry. Goodwill puts 91 cents per dollar it generates into programs designed to train and employ the physically or mentally disadvantaged.

As Goodwill chairman Young knows, Miller's salary reflects an environment wherein nonprofits must compete for talented administrators who could make considerably more money in a similar capacity for a private company. A Nov. 8 New York Times article revealed that over four years, the average yearly pay increase for CEOs from 383 large companies was 38.1 percent, resulting in an average annual salary of $10.1 million by 1997. Even in Portland, Miller's compensation would place him nowhere near the list of the 100 most highly paid executives of area public companies.

"I see a struggle for nonprofits in deciding what is considered a reasonable salary for executives," says Robin White, a senior compensation consultant for Watson Wyatt Worldwide's northwest region. "If I could run a for-profit organization of comparable size and make $500,000, which is a conservative figure in Washington state, if I go to a nonprofit and make $150,000, is that so bad? That is a philosophical question these organizations are struggling with. There is a delicate balance between what an individual gets paid and to what extent they fulfill their organization's objectives and directives."

And now there is an additional entity vying for the services of highly regarded officials and directors in the not-for-profit sector: other nonprofits. In the last 10 years, the total number of nonprofit organizations in Oregon has grown from 12,000 to 18,000.

ORGANIZATION	United Way of the Columbia Willamette	Society of St. Vincent de Paul of Portland	St. Vincent de Paul Rehabilitation service of Oregon, Inc.
CHIEF	Lawrence Norvell, President	Janice Pelster, Executive Director	Roy Soards, Executive Directory
SALARY	$130,200	$49,427	$81,00
BENEFITS	$27,577	$4995	$4,050