Raising Cane
By Rob Perez
Some nonprofit executives
see pay raises in thin timesHe oversaw an organization in which revenue plunged 22 percent over two years, largely due to less financial support from the public.
Yet his salary went in the opposite direction, climbing nearly 12 percent.
This isn't the new math of Wall Street.
It's the math of a long-time Hawaii nonprofit organization: the Boy Scouts of America Aloha Council.
Terry Trout, then the top executive for the council, was paid $126,500 in 2000, up from $120,000 in 1999 and $113,400 in 1998. Over that period, the group's revenue fell to $2.6 million in 2000, compared with roughly $3.8 million in 1999 and $3.4 million in 1998, according to council documents.
Trout's salary boost in the face of substantially lower revenue was among the more interesting findings in a Raising Cane review of the most recent tax returns for dozens of Hawaii's nonprofit organizations. The returns included salaries for the highest-paid employees.
Looking at mostly social services-type organizations, the review focused on executive pay during what has been difficult economic times for Hawaii's nonprofit sector.
For the most part, the administrators running the organizations fared well, seeing modest increases -- typically single-digit percentage raises -- in their annual paychecks over the past couple years.
But some received no raises and a few had declines.
In one example that comes with a major caveat, Aloha United Way President Irving Lauber saw his pay fall to $150,351 in 1999, from $185,743 in 1998.
The caveat: Lauber's 1998 compensation was inflated by a one-time adjustment because of changes in Internal Revenue Service regulations on pensions. The increase offset the projected loss Lauber incurred due to the pension changes, according to the AUW.
Discounting the one-time adjustment, Lauber's 1999 salary actually was the same as his pay for the previous year. No one at AUW received a pay boost in 1999.
"It just wasn't a time we could afford increases," said David McCoy, AUW board chairman.
Hawaii nonprofits, especially those that rely mostly on donations, have had tough times in the past decade. The sluggish state economy put a crimp on charitable giving, and the recent stock market troubles, leaner corporate coffers and tighter government budgets for social services have only added to the financial challenges.
"You have to work harder and harder to cobble money together," said Sidney Rosen, head of Adult Friends for Youth.
The harder work and more difficult economic environment don't necessarily translate into top-scale wages.
Hawaii salaries tend to be lower than those found in comparable mainland markets, according to industry experts.
A 2001 study by San Francisco-based CompassPoint Nonprofit Services (with help from the Hawaii Community Foundation) showed that the average executive director's salary at a Hawaii nonprofit was $49,691, well below the national average of $57,332.
Despite such data, it's not hard finding executives making six-figure salaries here.
If you look beyond the social services-type agencies, it becomes even easier.
At corporate foundations and nonprofit health-care companies, salaries of several hundred thousand dollars are not unheard of. Kapiolani Health, for instance, paid its chief executive, Roger Drue, $555,638 and contributed nearly $88,000 to his benefit plan, according to the company's tax return for the fiscal year ending June 2000. The company had $40.5 million in revenue that year.
For social services-type organizations, however, top salaries in Hawaii generally fall below $150,000. When board members set compensation, they typically consider how the organization has fared under the chief executive's leadership and what pay levels are at comparable agencies.
Rees Falkner, who succeeded Trout as scout executive for the Aloha Council, said the national Boy Scouts organization establishes salary ranges for positions nationwide, including those in Hawaii.
In Trout's case, it recommended 6 percent and 4 percent pay increases for 1998 and 1999, respectively, based on his regular duties, Falkner said. And the local board, which sets the precise salary, also considered Trout's added duties of conducting a campaign to raise several million dollars for a new council headquarters, according to Falkner. The new building opened last year.
Board members here "are very astute, very tough," Falkner said. "They're very careful with the donated dollars."
One of the biggest jumps in a CEO's salary was at Hale Kipa, the Oahu organization that provides shelter and services for at-risk youth. In the group's 1999 tax return, Punky Pletan-Cross' compensation was listed at $96,833, a 56 percent increase from the previous year.
Pletan-Cross said he quit a comparable mainland job and took a 33 percent pay cut in 1998 to join Hale Kipa with the understanding that if the board was happy with his work and he was a good fit for the organization, his pay would be adjusted accordingly.
By the fiscal year that ended June 2001, his pay was bumped to $100,000 as Hale Kipa revenues topped $7 million, a nearly 80 percent increase from two years prior.
While IRS regulations require nonprofits that file Form 990 tax returns to make them available for public inspection during regular business hours, not all organizations are forthcoming with such information.
At Helping Hands Hawaii, for example, an agency executive on Wednesday said its tax return wasn't immediately available and by week's end hadn't responded to a Star-Bulletin request to see it.
(Its 1999 return -- the most recent one available through www.guidestar.org, a Web site the IRS refers people to -- shows its president, Louise Funai, was paid $80,000).
If an organization that gets donations from the public isn't forthcoming with public information, that should raise some red flags. After all, plenty of worthy charities readily make their tax returns available, no questions asked.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: rperez@starbulletin.com.
