I would have to disagree with your argument. You are more or less arguing that these hero's are only in their position because they are able to raise money and rent seek by taking money away from other charities. That only one side of the argument. These men and women in these posistions are probably hired (I hope) not just to raise money but also how to distribute said money in the most effective ways possible; if is the case, the salaries might be fair. At least I would think so.

What makes us think charity giving is zero-sum?

William Bernstein would agree with you, here is an interesting article on pay and performance.

http://www.efficientfrontier.com/ef/0adhoc/excel.htm

"The natural place to start is with David Swensen, Yale’s wildly successful endowment manager, who was paid $1.3 million in 2005—chump change for someone with his track record. What drives him? Why does he hang around Yale when he could be doing so much better elsewhere? In a recent interview with the New York Times, Swensen described his pleasure at knowing that he made it possible for many more poor students to attend Yale: "In the finance world it is very easy to measure winning and losing in dollars and cents. That has always seemed to be an inadequate measure. The quality of life is a better way to measure winning and losing. Money is only one element of that."

And he concluded:

it pays mightily to ask exactly what values underlie your investment company’s culture: raw financial incentive or pride of craft? In a poker game, the person who doesn’t know who the patsy is, is the patsy. In the same way, if you’re not absolutely clear about whether your fund family is a marketing company or an investment company, then you are the patsy.

Copyright © 2007, William J. Bernstein. All rights reserved.

Why shouldn't they be paid? Charity, like health care, is a good thing, it should be high paying so there's an incentive for more people to go into it.

Of course you always want responsible people who are truly passionate about their work, and that is not something that is a sign of immaturity. So I do take issue with your calling them "boys," though caring more about yourself than others really is immature. You might not be too interested in semantics, but a chartible six-figure boy makes more sense to me than a six-figure charity boy.

"Of course if Kristof's stars really do increase the total take that goes to charity, then it would be a different story, but does he have any evidence that this is the case?"

Common sense would suggest that high slaries would make people distrust the charity.

I can't think of an easier way to discourage people from giving than point out that the people who run that charity are making extremely large salaries.

And if our econmic system were deomcratic we wouldn't need charities.

"The natural place to start is with David Swensen, Yale’s wildly successful endowment manager, who was paid $1.3 million in 2005—chump change for someone with his track record."

I find I am suffering from a knee jerk nausea when made aware of any person who was wildly successful during the financial orgy of the last eight years. Especially when they represent one of America's pampered and favored wealth enclaves. Kind of makes me want to add "least deserving" to the list.

As far as paying high salaries is concerned, the premise is that high salaries yield high performance, but we know for a fact that this is false - and we knew it before the current crisis (Kristoff himself says "I also worry that if aid groups paid executives as lavishly as Citigroup, they would be managed as badly as Citigroup.")

A second (silent) premise of Kristoff's column is that the charity must be private enterprise. Actually, the most efficient way to raise money for charitable purposes is through progressive taxation or excise taxes (for example).

Now, how could anyone expect Mr. Kristoff to argue otherwise? After all, he's part of a profession that pays its pundits and opiners very well and we all know what a great job they've been doing.

aunt deb: AGREED.

Joe at 8:23 made an excellent point.

http://tech.mit.edu/V112/N9/united-way.09w.html
United Way Head Resigns Over Spending Habits Feb 1992

"Bernhard announced three immediate changes in response to concerns about Aramony's style of travel: a ban on first-class travel and supersonic Concorde jet flights for United Way employees and a requirement that employees use taxis or other "economical" ground travel. Aramony said he flew the Concorde two or three times because of illness or schedule demands and used chauffeured cars to make back-to-back meetings.

Aramony, 64, told the audience that he will receive full pension benefits upon his retirement, but no "golden parachutes." He receives a salary of $390,000 a year and $73,000 in other compensation, including contributions to his pension funds."

Contributions to United Way nationwide at least temporarily cratered. They never imagined they were subsidizing flights on the Concorde or limo services.

It reminds me of the cynical saying about the missionaries who first went to Hawaii in the 19th century. "They came to do good. And they did very well indeed."

There seems to be some pretty good evidence that these high salaries and access to lavish benefit packages does more to instill a sense of entitlement to the executive class than any kind of performance boost.

We over-rate and over-compensate top "talent" and we over-value choice in general.

Cade Massey and Richard Thaler done a fascinating study back in 2006 titled "The Loser's Curse: Overconfidence vs. Market Efficiency in the National Football League Draft".

Here's a link to a brief overview:
http://www.theatlantic.com/doc/200605/football-sidebar

Here's a link to the entire paper (worth a read!):
http://mba.yale.edu/faculty/pdf/massey_thaler_overconfidence_nfl_draft.pdf

Here's a couple of excerpts:
...Two of the building blocks of modern neo-classical economics are rational expectations and market efficiency. Agents are assumed to make unbiased predictions about the future and markets are assumed to aggregate individual expectations into unbiased estimates of fundamental value. Tests of either of these concepts are often hindered by the lack of data...
...The implications of this study extend beyond the gridiron. Football players are surely not the only employees whose future performance is difficult to predict. In fact, football teams almost certainly are in a better position to predict performance than most employers choosing workers. Teams get to watch their job candidates perform a very similar task at the college level and then get to administer additional tests on highly diagnostic traits such as strength and speed. Finally, once hired, performance can and is graded, with every action visible on film from multiple angles! Compare that to a company looking to hire a new CEO (or an investment bank hiring an analyst, a law firm hiring an associate, etc.). Candidates from outside the firm will have been performing much of their job out of view. Outside observers see only a portion of the choices made, and unchosen options are rarely visible at all. Even once a CEO is hired, the company.s board of directors is unlikely to be able to measure his or her performance nearly as accurately as a team can evaluate its quarterback. In our judgment, there is little reason to think that the market for CEOs is more efficient than the market for football players. Perhaps innovative boards of directors should start looking for the next Tom Brady as CEO rather than this year's hot young prospect...

My main goal has been to make enough money to donate a large amount to non profits. Evaluating non profit effectiveness is difficult.

There are two sides to the high compensation debate, one side is populated by consultants and fundraisers, the other side is populated by thoughtful donors.

Whenever I become aware of comments that high administrative expenses should be ignored, and it is a common sentiment, I check the source, and almost always the person making the comment is feeding from the non profit trough.

This comment from Trent Stamp, former CEO of Charity Navigator, on what he feels is the most effective non profit in the US is simple.

Bottom line for me, salary of a couple hundred thousand in a high cost location is fine, beyond that, I question the motivation. Spending every working minute doing something worthwhile should be a large reward in itself.

http://directrelief.org/PressCenter/InTheNews/2008/BestCEO.aspx

assuming zero sum, this is similar to the kinked demand curve for airlines, where one drops price to gain market share, but is followed by the others, upon which all end up with the original market share but at a lower price - so no one drops price in the first place

if one airline raises price, no one follows and causes that one to lose market share, so no one raises price either - thus all airlines are stuck at the point of the kink

if one charity dropped its administrative and executive pay substantially and used this to increase its share of fixed donations, either the others must follow suit or lose market share, and vice versa

of course charities differ more than airlines for similar flights, but the analogy is reasonable, especially given strong incentives by charities to conceal detailed information that would allow donors to make such comparisons and break the kink in the demand curve, which supports DB's explanation

Right now, the leitmotif is rather: Getting Poor Helping the Rich, than: Getting Rich Helping the Poor !

Sorry to see you forced to discuss Kristoff. He's a bit creepy, his analytic skills are inadequate, and no one would care what he had to say if the NYT hadn't hired him.

I'm torn about this post. My own experience in the nonprofit world bears out much of what's written, but I have to say some of the execs at some of the nonprofits I've seen are absolutely stellar, committed, high-performing folks. Others are not, including where I work, where the CEO pulls about 200K and, frankly, is pretty useless. I guess what I really take issue with in this post is the broad sweeping generalization - kind of an f- 'em all statement toward the end about how charity heads basically charge a lot of money to sow destruction everywhere - my sense is that universal accusation overstates a case that probably applies to 10% of charities. I admire Dean Baker's work tremendously, but that kind of parting shotgun blast to an entire sector's leaders was silly, and detracted from a salient point deserving more nuanced discussion.

" Of course if Kristof's stars really do increase the total take that goes to charity, then it would be a different story, but does he have any evidence that this is the case?"

I am not sure that it's possible to measure whether or not that's the case. However, keep in mind how Pallotta's events worked. To even enter the event, participants had to have raised a significant amount of money - from what I've read often $1,500 to $3,000. I recall contributing to a friend and to a co-worker, back around 1990, who were participating in breast cancer walks. I made the pledges out of support for the individuals, and didn't really think about it afterward.

At least in my case, that type of "getting hit up for a contribution by friends, family or co-workers"-type contribution doesn't affect my other charitable giving, and thus the pledges increase how much I give during any given year.

My apologies - for the sake of accuracy, as I reflect, I realize that the events were held around 1999 or 2000, not 1990.

he' right i'm going through a hardship right now and these so calles help organizations are not helpful. the only people they help are themselves i know i've been there.

I Do not want to be rich I Just Wish I could Afford a Home In
Independence Missouri Where My Husband Could get better pay ...Since
I Live In the Woods Of Southern Missouri And The Job My Husband is
Working only Pays 8 Dollars a Hr ...As of if We could Get to
Independence Missouri and Him Get hired There He would be making 15
to 20 dollars A Hr for doing the same work ....How Is this My
Husband's Fault For the Low Income Area's To Down Grade Pay raises
and Pay More Money In the Low Income Places of Missouri Such As The
Woods Well ....It is Not fair for the Rich to take Advantage Of
Places And Area's That Proclaim Fewer Jobs So People have to work for
there Company Or they Dont have a Job At all....Sorry to Say I Blame
the Rich for Taking Advantage of Area's That Have Low
Employment.....So What Kind Of Chance do I Have to Buy A Home In
Independence With My Husband's Income from the Wood's ....I DON'T
///The Rich who Owns these companies Knows that ...And This is Why
they Only Pay 8 dollars a Hr For a 20 a hr Job ....So If your Rich
Help Me Buy a Place In Independence So I Can Relocate to get better
Pay
Anna Matney
ajm31mo@yahoo.com

People At My Husband;s Work Has Not seen a Pay raise in 4 years Not even a Cost of living Raise This Is Where Rich Is Taking Advantage of Low Employment Areas