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posted by hubie on Thursday February 22, @11:28AM   Printer-friendly
from the when-the-cat's-away-the-mice-will-play dept.

The University at Buffalo reports on a recent School of Management study https://www.buffalo.edu/news/news-releases.host.html/content/shared/mgt/news/when-newspapers-close-nonprofit-executive-salaries-go-way-up.detail.html that correlated closings of local newspapers and c-suite salaries of nearby non-profits:

Forthcoming in the Journal of Accounting and Public Policy, the study found that when a newspaper goes out of business, total executive compensation at local nonprofits goes up by more than $38,000 on average — an increase of nearly 32%.

"Donors and volunteers expect their contributions to go to the execution of the nonprofits' mission, rather than leadership salaries, so unreasonably high compensation represents a serious problem for these organizations,"[...]

[...] the researchers ran a series of tests using financial information of nonprofits from 2008 to 2017 obtained from the IRS, as well as local newspaper closure data from previous research studies and from the University of North Carolina's Center for Innovation and Sustainability in Local Media.

Their findings show that nonprofit executive spending increases the same year a local newspaper closes, and that persists over the next three years. They also observed a decline in residual cash and donations but did not find any changes in program spending or long-term investments, suggesting that the increased compensation is not due to increased performance, but rather the loss of the monitoring newspaper.

"We found declines in both endowments and donor contributions at nonprofits after a local paper closes," says Khavis. "This suggests that the executives' pay increases are funded by spending down endowments, and that donors react to the loss of external monitoring by withholding their donations — which is consistent with the findings of previous studies."

I'm a proud subscriber to my local dead trees newspaper. Yes, it costs through the nose these days, but I think it's the least I can do for my community.

First seen in a Buffalo News story (paywalled?) which ends with this:

Khavis said even in areas where newspapers didn't completely close, but downsized or merged to the point where "they were open in name only," they saw the same effect on nonprofit executive pay.

The number of papers closing does not bode well for "misbehavior" by institutions, Khavis said. Between 2004 and 2015, the U.S. newspaper industry lost more than 1,800 print outlets to closures and mergers. A study by Northwestern University's Medill School of Journalism found that the rate of local newspaper closings accelerated to 2.5 per week in 2023.


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  • (Score: 4, Informative) by Anonymous Coward on Thursday February 22, @01:31PM (16 children)

    by Anonymous Coward on Thursday February 22, @01:31PM (#1345641)

    If you are curious about executive pay for any nonprofit, one place to look is https://projects.propublica.org/nonprofits/ [propublica.org]
    I was interested in a professional society about 5 years ago and at that time only found sites that required signing in. I was pleased to see how much information (taken from IRS and other filings) is now openly available at ProPublica.

    For example, see https://projects.propublica.org/nonprofits/organizations/134141945 [propublica.org] The well known, Michael J Fox Foundation For Parkinson's Research. Here is one small section of the "dashboard" available:

    Notable Expenses ---------- Percent of Total Expenses

    Executive Compensation $4,050,484 1.2%
    Professional Fundraising Fees $104,124 0.0%
    Other Salaries and Wages $24,215,146 7.1%

    • (Score: 4, Interesting) by Freeman on Thursday February 22, @03:14PM (3 children)

      by Freeman (732) on Thursday February 22, @03:14PM (#1345657) Journal

      That's actually not horrible all things considered.

      For the American Red Cross:
      Executive Compensation $5,758,532 0.2% (Not as big as it could be.)
      Professional Fundraising Fees $301,063 0.0%
      Other Salaries and Wages $1,119,398,026 36.7% (Actually very large, though this may be pay to Nurses who draw blood/etc. So, maybe okay?)

      Comparatively, the March of Dimes doesn't look good or at least not any better:
      Executive Compensation $3,246,968 2.9%
      Professional Fundraising Fees $1,782,719 1.6%
      Other Salaries and Wages $43,554,994 38.3%

      United Way Worldwide (25% of your donation is going straight to United Way salaries):
      Executive Compensation $4,504,416 5.4%
      Professional Fundraising Fees $0
      Other Salaries and Wages $17,122,165 20.4%

      Salvation Army World Service Office Sawso (Only about 9% is going to salaries)
      Executive Compensation $232,235 0.8%
      Professional Fundraising Fees $0
      Other Salaries and Wages $2,306,248 8.1%

      Actually figuring which of the eleventy dozen United Way / Salvation Army charities you're actually donating to, quite another feat altogether.

      --
      Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
      • (Score: 3, Interesting) by JoeMerchant on Thursday February 22, @06:31PM (2 children)

        by JoeMerchant (3937) on Thursday February 22, @06:31PM (#1345703)

        The other question in my mind is: how accurate/consistent is this reporting?

        How many "off books perks" are going to the executives?

        When wages are paid, are they being paid to straight 9-5 normal productivity employees, are they being paid to work from home volunteers who phone in once a month and do little else, or are they being paid to on-the-job trainee charity case employees like Goodwill does, and no, I don't know if those salaries at Goodwill are booked as "employee salaries" or "program spending" nor could I say which would be the "better" way to report that activity.

        When employees travel to perform services, are they compensated mileage costs by the organization, provided a company vehicle, or do they deduct it from their personal income tax? Several 501(c)(3)s I know easily spend over 50% of their program funding on getting to and from the people they serve.

        Of the 501(c)(3) organizations I have known what I can say is: most are unique and can't possibly be evaluated by three numeric columns on a spreadsheet.

        --
        🌻🌻 [google.com]
        • (Score: 3, Insightful) by Anonymous Coward on Thursday February 22, @09:00PM (1 child)

          by Anonymous Coward on Thursday February 22, @09:00PM (#1345730)

          > can't possibly be evaluated by three numeric columns on a spreadsheet.

          Fyi, check out one of these links, the reporting is extensive. The three columns quoted here are a tiny part, that happens to sync with the original story.

          Agreed, any charity will be hard to quantify--but the numbers that IRS requires may be a reasonable place to start cost-effectiveness comparisons (or as we used to call them, "buzz per bucks ratio").

          • (Score: 2) by JoeMerchant on Thursday February 22, @09:07PM

            by JoeMerchant (3937) on Thursday February 22, @09:07PM (#1345733)

            My basic rule is: if I have to look up a charity on a spreadsheet to evaluate it's "value" - my money can be better given to another charity that I don't have to do that for. Now, having said that, checking up on the charities I _do_ give to in this way is very valuable in terms of deciding which ones need the help more...

            --
            🌻🌻 [google.com]
    • (Score: 4, Interesting) by Immerman on Thursday February 22, @03:40PM (10 children)

      by Immerman (3985) on Thursday February 22, @03:40PM (#1345666)

      And something to keep in mind when seeing executive pay, is that nonprofits have to compete pretty directly with for-profit corporations in order to attract quality talent.

      E.g. if The Red Cross wants to attract someone with a track record of being able to, e.g. pull a large organization out of financial trouble, attract big donors, clean out encrusted and counterproductive bureaucracy, or whatever - they're going to have to lure them away from taking a fat contract with a big multinational corporations instead. And generally speaking, while doing good works is definitely worth something, very, very few people consider it worth taking a 90% or more pay cut.

      • (Score: 2) by SomeRandomGeek on Thursday February 22, @11:08PM (1 child)

        by SomeRandomGeek (856) on Thursday February 22, @11:08PM (#1345749)

        nonprofits have to compete pretty directly with for-profit corporations in order to attract quality talent

        I think what you meant to say is that nonprofits have to compete pretty directly with for-profit corporations in order to attract executives who are in high demand.
        There is not a lot of evidence that executives who are in high demand are "quality talent". Rather, they seem to be mostly psychopaths who recognize what is good for their career, and do what is good for their career, regardless of the consequences for anyone else, including their employers.
        But is probably correct that nonprofits don't have some magic crystal ball that enables them to determine who has talent as distinct from who has previous experience doing a similar job.

        • (Score: 3, Interesting) by Immerman on Friday February 23, @07:20AM

          by Immerman (3985) on Friday February 23, @07:20AM (#1345803)

          I don't think anyone actually wants a "high demand" executive with no talent. Nonprofits least of all, since they don't care about the opinions of their nonexistent investors, and most donors have no idea who the executive is anyway.

          But it's a problem similar to hiring for any other position - it can be difficult to judge the actual quality of talent, especially when the results are difficult to quantify and the candidate can talk a good line. Those in high demand are those *perceived* to be quality talent, regardless of the difficult-to-judge reality. But it's almost always the quality of talent they want, executive "celebrity" alone rarely has all that much financial value, which is why their are very few Kardashians at the helm of Fortune 500 companies.

          However, track records are often a decent approximation for talent quality. There are many executives with a track record of having been at the helm of several companies as they went from troubled to financially healthy. And while one might be luck, and two coincidence, three or four strongly suggests a causal link - at least assuming there weren't also a bunch of companies that drove into the ground under their watch mixed in as well.

      • (Score: 1) by khallow on Friday February 23, @12:42AM (7 children)

        by khallow (3766) Subscriber Badge on Friday February 23, @12:42AM (#1345763) Journal

        And something to keep in mind when seeing executive pay, is that nonprofits have to compete pretty directly with for-profit corporations in order to attract quality talent.

        Most non profits can get people to work for them for a discount. Sometimes even a huge discount like that alleged 90%.

        very, very few people consider it worth taking a 90% or more pay cut.

        Usually it's a combination of pay cut and make the world a better place.

        • (Score: 2) by Immerman on Friday February 23, @07:27AM (6 children)

          by Immerman (3985) on Friday February 23, @07:27AM (#1345807)

          Sometimes, but not often. People tend to be selfish when it comes to selling their time and labor - *especially* people who've managed to claw their way to the top of the corporate latter. It's a cutthroat game that demands incredible focus and dedication to advancing their own career, often at other people's expense.

          And if a nonprofit has a choice between hiring an adequate pretty good executive that can probably bring in $100M in annual donations for a $1M dollar salary, and a really good executive that can probably bring in $1,000M a year for $300M salary, the second one is by far the better deal.

          • (Score: 2) by Immerman on Friday February 23, @07:30AM

            by Immerman (3985) on Friday February 23, @07:30AM (#1345808)

            Yes, the corporate latter.

            You know - the blank space on the corporate wall where the corporate ladder used to be before someone managed to smash through the glass ceiling and make off with the coffers.

          • (Score: 1) by khallow on Friday February 23, @03:58PM

            by khallow (3766) Subscriber Badge on Friday February 23, @03:58PM (#1345864) Journal
            I'm pretty sure a wise nonprofit doesn't want the claw-to-the-top types. An obvious way to weed those out is to offer less than market rate.
          • (Score: 1) by khallow on Saturday February 24, @04:40AM (3 children)

            by khallow (3766) Subscriber Badge on Saturday February 24, @04:40AM (#1346013) Journal

            And if a nonprofit has a choice between hiring an adequate pretty good executive that can probably bring in $100M in annual donations for a $1M dollar salary, and a really good executive that can probably bring in $1,000M a year for $300M salary, the second one is by far the better deal.

            What will the nonprofit do with a billion dollars in revenue? It's not like a normal business that can just take it as profit. They are nonprofit after all.

            • (Score: 2) by Immerman on Saturday February 24, @02:56PM (2 children)

              by Immerman (3985) on Saturday February 24, @02:56PM (#1346078)

              Spend it on the doing the work they were founded to do?

              All that emergency medical aid doesn't come free.

              • (Score: 1) by khallow on Sunday February 25, @03:04AM (1 child)

                by khallow (3766) Subscriber Badge on Sunday February 25, @03:04AM (#1346144) Journal
                Point is the work they were founded to do doesn't magically increase by a factor of six or so just because they have a huge amount of money.
                • (Score: 2) by Immerman on Monday February 26, @12:22AM

                  by Immerman (3985) on Monday February 26, @12:22AM (#1346244)

                  Nope. But they're not even able to tackle 1% of the problem, so every little bit helps.

                  Not for every nonprofit, certainly. But money is very often the limiting factor in what they can accomplish, not demand.

    • (Score: 0) by Anonymous Coward on Thursday February 22, @09:41PM

      by Anonymous Coward on Thursday February 22, @09:41PM (#1345737)

      Here's the Internet Archive, https://projects.propublica.org/nonprofits/organizations/943242767 [propublica.org] and why I like librarians:

      Notable Expenses Percent of Total Expenses

      Executive Compensation $0
      Professional Fundraising Fees $0
      Other Salaries and Wages $0

      Under subcategory Key Employees and Officers these people all make under USD $250K, and the top level work for free ($0.00).

      I didn't try to figure out why, but there is also this https://projects.propublica.org/nonprofits/organizations/852378958 [propublica.org] smaller entity with name, "Internet Archive Us" that is smaller monetarily, and has overlapping key people.

  • (Score: 4, Insightful) by ikanreed on Thursday February 22, @02:47PM

    by ikanreed (3164) Subscriber Badge on Thursday February 22, @02:47PM (#1345651) Journal

    There aren't places where local newspapers are doing okay. And let's be honest, the "not-for-profit" facade is being dropped. Running charity like a business just means barely disguised greed.

  • (Score: 3, Funny) by DannyB on Thursday February 22, @04:57PM (2 children)

    by DannyB (5839) Subscriber Badge on Thursday February 22, @04:57PM (#1345683) Journal

    I have a friend, older than me surprisingly enough, who still gets news published in dead tree format delivered to his door.

    He is the only one I know of who gets this service.

    However he does (yes really!) have two birds in two bird cages. So I'm sure those newspapers go to good use.

    --
    The people who rely on government handouts and refuse to work should be kicked out of congress.
    • (Score: 1, Interesting) by Anonymous Coward on Thursday February 22, @06:28PM

      by Anonymous Coward on Thursday February 22, @06:28PM (#1345701)

      We still get a daily newspaper, delivered early morning, usually found in the paper tube around 7am. There have been apparent problems in recruiting delivery people, and once or twice a month the paper might not make it. There is an online e-edition if we want to see it that way.

      Two of us here read it and do the three crossword puzzles, then the papers are passed along to a disabled relative who lives nearby. They don't have the skills to run a computer and see internet news, and don't have cable TV either, so looking through the old papers gives them some clue about what's going on in the outside world.

    • (Score: 3, Interesting) by JoeMerchant on Thursday February 22, @06:36PM

      by JoeMerchant (3937) on Thursday February 22, @06:36PM (#1345705)

      Ten years ago when we moved in here (1.2 acres at the end of a long shared private driveway) a vehicle used to drive in our gate, headlights on high beams, and pull a U-turn in the grass of our meadow, every morning around 4:45am. When I started closing the gate at night he got the hint and managed to turn around without killing our grass and wildflowers. What was he doing? Why, delivering the daily paper to our neighbor, of course.

      Our neighbor lost his job as reporter several years back and the paper stopped coming to his house, but now we have an utter asshole who drives around the neighborhood from 4:15 to 5:00am every day on a motorcycle with no muffler. I'm assuming this gift to suburbia is also related to delivering dead trees to the 0.2% of homes who still do that thing.

      --
      🌻🌻 [google.com]
  • (Score: 2) by driverless on Friday February 23, @06:01AM (3 children)

    by driverless (4770) on Friday February 23, @06:01AM (#1345797)

    then this web site [tylervigen.com] will shortly have a graph that explains it.

    • (Score: 0) by Anonymous Coward on Friday February 23, @12:23PM (2 children)

      by Anonymous Coward on Friday February 23, @12:23PM (#1345835)

      Ha, good find!

      At the bottom of the page, he writes:

      Why this works

              Data dredging: I have 25,237 variables in my database. I compare all these variables against each other to find ones that randomly match up. That's 636,906,169 correlation calculations! This is called “data dredging.”Note Instead of starting with a hypothesis and testing it, I instead tossed a bunch of data in a blender to see what correlations would shake out. It’s a dangerous way to go about analysis, because any sufficiently large dataset will yield strong correlations completely at random. [...]

      With 600M+ possible correlations already, he may not be looking for new data for awhile? Or, I suppose it's possible that he already has data on local newspaper closings and nonprofit executive salaries--and will duplicate the study quoted in tfa.

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