Charity CEO Pay Questioned: Senators Want Answers Over Nonprofit Leader's $1 Million Compensation
WASHINGTON — A group of Republican senators is questioning high salaries and expensive travel bills for executives at the Boys & Girls Clubs of America, raising issues that could jeopardize millions in federal funding for the national charity.
The four senators said they were concerned that the chief executive of a charity that has been closing local clubs for lack of funding was compensated nearly $1 million in 2008. They also questioned why in the same year officials spent $4.3 million on travel, $1.6 million on conferences, conventions and meetings, and $544,000 in lobbying fees.
"The question is whether or not a very top-heavy organization might be siphoning off federal dollars that should be going to help kids," said Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee.
The senators sent a letter to the head of the charity's board of governors Thursday seeking detailed financial information about executive compensation, travel and lobbying expenses, and how the national charity awards grants to local clubs.
The issues they raise could threaten the reputation of a popular charity that supports 4,300 local Boys & Girls Clubs serving about 4.8 million children. The timing threatens a bill moving through the Senate that would provide up to $425 million in federal money to the national organization over the next five years.
"That bill isn't going anywhere until we get the answers to these questions," said Sen. Tom Coburn, R-Okla.
Along with Grassley and Coburn, the letter was signed by Republican Sens. Jon Kyl of Arizona and John Cornyn of Texas. The senators noted in their letter that the organization posted a $13.6 million loss in 2008, according to tax records.
"We find it hard to reconcile this loss with the amount spent on executive salaries, perks, and lobbying expenses," the senators wrote. "We are especially concerned because it is our understanding that some independent clubs have closed or are on the cusp of closing because of a lack of funding."
Community Boys & Girls Clubs are all locally governed, but most receive tens of thousands of dollars each year from the Atlanta-based national charity. In 2008, the national charity reported receiving $41 million in government grants and $51 million in other gifts and contributions.
That same year, the national organization spent $57.6 million on grants to local clubs and $37.5 million on salaries and benefits, according to tax records.
In 2009, the Justice Department awarded the Boys & Girls Clubs of America a $44 million grant for mentoring services. The money came from the economic recovery package enacted last year. The grant was more than twice the size of the next largest, $19 million, which went to Goodwill Industries International.
Roxanne Spillett, president and CEO of the Boys & Girls Clubs of America, received a total compensation of $988,591 in 2008, according to the charity's tax filings. She got a base salary of $360,774, a bonus of $150,000 and other compensation of $83,152, for a total of $593,926. She also received $385,500 in deferred compensation, most of which went to a retirement plan, and $9,165 in nontaxable benefits.
The organization listed two registered lobbyists among its highest paid employees. Glenn Permuy, a senior vice president, received $427,355 in total compensation, including $22,500 deferred. Kevin McCartney, senior vice president of government relations, had $217,859 in total compensation, including $13,502 deferred.
Evan McElroy, senior vice president of communications for the Boys & Girls Clubs of America, said the charity would respond to the letter before the March 29 deadline set by the senators. He declined to answer questions about the charity's finances when contacted Thursday but said in an e-mail that Spillett's base salary has not increased since 2006.
In the e-mail, McElroy said the charity's compensation committee follows Internal Revenue Service guidelines for nonprofit organizations. He said Mercer, a human resources consulting firm, analyzed executive compensation and found it was "appropriate for a large, national, tax-exempt, youth organization."
Despite recent closings, Spillett has overseen significant growth in the number of local Boys & Girls Clubs since becoming president of the national organization in 1996. During that time, the number of local clubs grew from 1,850 to 4,360.
Experts were split on whether Spillett's pay was excessive for a charity with revenues of $107 million in 2008, the latest year available.
"It's certainly not unusual to see people leading major charities, which after all, are very large, complex operations, making substantial salaries," said Brian Vogel, a senior principal with Quatt Associates, a management consulting firm in Washington.
Vogel said "$500,000 or $600,000 wouldn't be outside the marketplace. ... Remember, these are organizations that can be as hard to manage as a major for-profit business."
Annual compensation averaged $462,000 last year for the CEOs of charities with expenses of more than $100 million, according to a compensation study by Charity Navigator, a Web site that evaluates charities.
"The people who use our site, donors, would be appalled by a salary like this," Ken Berger, president and CEO of Charity Navigator, said of Spillett's compensation. "If you want to be a millionaire, go and work in the for-profit sector."
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STEPHEN OHLEMACHER 03/12/10 11:39 PM ET Associated Press