Non-Profits Lucrative For Some Executives

IRS Commissioner Mark Everson said in his discussion of “Fiscal Year 2006 Enforcement and Service Results" that, “We’ve placed renewed attention and added resources in the charitable arena to help protect the integrity and maintain faith in the charitable sector,” including “problem areas” in “executive compensation.”

The Philadelphia Inquirer reports how one “Nonprofit is lucrative for founder.”

His organization, the National Association of Town Watch [National Night Out], devoted about a third of its budget in 2005 to pay Peskin a $255,000 salary and $42,000 in benefits, according to the group's most recent tax filings.

According to the NonProfit Times, a business publication covering nonprofit management, the average salary for a charity with less than $1 million in annual revenue - the size of Peskin's organization - is about $70,000. Peskin's pay is in line with that of chief executives of large nonprofits with annual revenue greater than $50 million, according to the trade journal.

Peskin is paid more than any federal official other than the president, who makes $400,000. He is paid more than the governor of any state - Gov. Rendell makes about $164,000 this year. Law enforcement officials don't make what he makes. The Philadelphia police commissioner makes $143,000, and the Pennsylvania State Police commissioner is paid $125,000. They manage departments with thousands of employees.

What’s more:

One reason the association can afford to pay Peskin so handsomely is that American taxpayers subsidize about a third of his organization's $900,000 budget. The Justice Department last year gave Peskin's association a $296,000 crime-prevention grant.

While the grants for National Night Out are a fraction of the Bureau of Justice Assistance's annual $1.5 billion budget, the money continues to flow even as violent crime is increasing and local law enforcement officials complain about reductions in federal assistance.

Some studies indicate that neighborhood-watch programs are not effective at reducing crime because they do not fundamentally change the behavior of criminals.

But, it’s good politics, for politicians:

Town watch has "no effect on violent crime," said Lawrence W. Sherman, director of the Jerry Lee Center of Criminology at the University of Pennsylvania. "And events like National Night Out - one night of marching and protesting - there's zero evidence that works."

But there is zero evidence that political leaders or law enforcement officials are inclined to reduce support for neighborhood-watch groups.

"They sound good and feel good," Sherman said. "You organize a lot of people, and that's good, politically."

Board members defend him:

The board chairman, Herbert M. Gross, 79, a Bala Cynwyd developer now retired to Florida, said Peskin did the work of two people and was "more than worth" his salary.

"It's unbelievable what he's done," said Marc Kooperman, a painting contractor and longtime board member. "He had a vision, and it worked."

OK, so Peskin's $300,000 divided by two is $150,000, on par with Pennsylvania’s governor and more than the State Police commissioner or Philadelphia’s police commissioner. I would guess that the governor and the police commissioners, also, "did the work of two people" but don't receive $300k.

Private, tax-paying corporations’ boards may have the freedom to grant lucrative executive compensation. But, in cases like this of non-profit organizations, subsidized by taxpayer funds and by exemption from paying income taxes and other taxes and fees, taxpayers’ funds are used and there should be more accountability and reasonability.