By Carisa Carlton, Special to the Independent
Many leaders of the most prestigious Laguna Beach nonprofit organizations receive six figure salaries, nearly 25% more than the city’s mean job salary.
The top ranking nonprofits aggressively compete for personnel with businesses and government by offering top salaries and benefit plans to key employees. The rankings include institutions that are non-operating charitable institutions, such as private family foundations.
Of the nearly 200 nonprofit entities based in Laguna Beach, 34 organizations possess assets exceeding $1 million. Of those, eight paid their key employees more than $100,000, according to an analysis of 2012 Internal Revenue Service tax filings, the most recent figures available.That compares with mean per capita income in town of $78,801 in 2012, according to the U.S. Census Bureau.
The most generous employee package went to ASSE International Inc.’s chief financial officer, Diane Mathuny. ASSE reported providing Mathuny $487,150 in salary and benefits, which Mathuny says includes a 401K plan, a pension plan, and medical benefits.
Thomas E. Willard reportedly receives $329,716 in salary and benefits from the Foundation for Affordable Housing. With Deborrah Willard’s $328,187 compensation package, the husband and wife team earned nearly $658,000.
Executive Director Herbert M. Bedolfe III received $253,523 for managing the $51 million Marisla Foundation.
Some may consider these nonprofit salaries excessive. Daniel Quaid, president and chief executive of OneOC, formerly Santa Ana’s Volunteer Center Orange County, advises nonprofits on industry best practices. OneOC consultants train volunteer board members on evaluating executives and establishing reasonable compensation. The three-step process for determining compensation includes establishing a formal process in writing, researching comparable data in the market place, and documenting the decision making process in board meeting minutes, Quaid said.
The IRS is responsible for enforcing the Federal Private Inurement Prohibition which forbids unreasonable compensation to a nonprofit insider, such as an officer, director, or key employee who has a personal or private interest in the activities of the organization. Overpaying an insider may be grounds for an organization losing their tax-exempt status.
How much compensation is too much for nonprofit leaders? Independent Sector, a leadership forum for nonprofits and philanthropies based in Washington, D.C., relies on the “reasonable compensation” guideline as the amount that would ordinarily be paid for like services, whether at nonprofits or for-profit companies. “Many charity ‘watchdogs’ recommend that public charities spend at least 65% of their total expenses on program activities. This standard is reasonable for most organizations,” Independent Sector says.
Determining whether a donation-seeking organization is managing their executive salaries responsibly is a common donor dilemma. “There is no ‘one size fits all’ answer, as the operating model of each nonprofit is specific to its structure and mission,” said Shelley Hoss, president of Orange County Community Foundation, which assists local donors in examining such questions and has created an online resource available to the public at ocnonprofitcentral.org, which includes detailed financial information.
Not all nonprofit organizations accept public donations, but ones with tax-exempt status must use surplus revenue to achieve goals rather than distributing funds as profits.
ASSE is a nonprofit organization which does not accept money from the public or consider themselves a charity. They do, however, receive $2.8 million in U.S. Department of State grants to promote international educational and cultural exchange. And, they generate roughly $11 million annually in student exchange fees.
The Marisla Foundation is a private, non-operating charitable institution that receives the majority of its funding from one individual: local resident Anne Getty Earhart. Earhart gave the nonprofit $40 million in two lumps sum payments of $20 million to help support penguin conservation in Chile and natural monuments sustainability in Belize, among other efforts. Even with such high assets, their biggest grant was about $70,000 and their grant application process reads more like a do-not-disturb sign.(Though the organization was established in 1986, 2012 was their first filing in Laguna Beach.)
The Willards moved to Laguna Beach in 2013 and they brought their seven nonprofit entities with them. With one exception, all the nonprofit organizations are named Foundation for Affordable Housing, and each is differentiated by a corresponding numeral: II, III, IV, etc. The nonprofit organizations reportedly provide units of safe and affordable housing for low-income seniors and families. The Willards, along with Stanford Smith and Paul Carroll, are on the board of each nonprofit. Twelve other individuals are on some, but not all of the boards of directors.
The list below highlights the 34 nonprofit organizations in zip code 92651 with assets exceeding $1 million in 2012. The list includes their revenue, their highest paid employee, how many hours the employee reportedly worked per week, and their total compensation package.*
Please see chart of salaries in print edition.