Sunday, February 5, 2012

Is the CEO of "Susan G. Komen for the Cure" Overpaid?

The Susan G. Komen for the Cure charitable organization created a firestorm of controversy last week when it defunded Planned Parenthood. Facing strong criticism from a wide array of sources, Komen quickly reinstated funding to preserve it's reputation as an organization devoted to protecting women's health (see, e.g., here). This was not the first controversy surrounding the charity, which has also been criticized in the last year for spending donor funds to sue or threaten to sue other charitable organizations, including small, local groups, for using its trademarked phrase "for the cure" (see, e.g., here).

The latest controversy has cast a bright spotlight on the structure of the Komen charity, which has raised billions for breast cancer research. I was shocked when I read in today's Daily Beast (here) that CEO Nancy Brinker (sister of Susan G. Komen) earns a salary of $5 million per year. This figure stunned me, and so I thought I would blog about the ethics of someone who profits so mightily from the charitable donations of others. Indeed, I could not fathom that anyone would make donations to a charitable organization that paid its CEO such an enormous salary. For that reason, before writing a scathing critique of Ms. Brinker, I thought I should double-check the Daily Beast's assessment of her compensation. What I found was substantially (if not completely) reassuring, and thoroughly altered the tenor of this post.

I started by checking Charity Navigator, a leading, independent website that evaluates charitable organizations. Susan G. Komen for the Cure is listed among its top-ranked charities; it has the highest rating (66.20) among all breast cancer charities. However, according to Charity Navigator's evaluation (here), Nancy Brinker is "not compensated." That dubious assertion is flatly contradicted by other sources., for example, in its listing of the 200 top charitable organizations (here), puts Brinker's salary at $531,924. And according to a story in this morning's St. Louis Post-Dispatch (here), the Komen organization's 2010 federal tax return declares that Brinker was paid $417,171 that year. I found no support whatsoever for either Charity Navigator's assertion of zero compensation or the Daily Beast's $5 million salary figure.

Based on the figures reported by and the St. Louis Post-Dispatch, it seems the Daily Beast inflated Ms. Brinker's salary by a factor of approximately 10, which is reassuring (about Ms. Brinker, not about the Daily Beast).  A $500,000 salary still might strike some as excessive for a CEO of a charitable organization. So, I decided to conduct a comparison of CEO salaries for highly-rated breast cancer charities. I used figures from Charity Navigator (bearing in mind the potential fallibility of its numbers) for the eight other four-star (highest ranking) breast cancer charities (not including Komen). They included the Dana-Farber Cancer Institute, the National Breast Cancer Coalition Fund, The Rose, Breast Cancer Connections, Young Survival Coalition, the National Breast Cancer Foundation, Inc., Living Beyond Breast Cancer, and Breastcancer,org. The average CEO annual compensation for those other charities is $240,802.87. However, this number is substantially inflated by an outlier: the $943,858 salary of the CEO of the Dana-Farber Cancer Institute. If that salary is removed, then the average of the other seven CEO salaries is below $160,000, less than one-third of the salary Ms. Brinker earns from Komen. The next closest salary is approximately one half of what she earns.

That said, her organization does rate more highly overall than the others (based in part on the incorrect assessment that she is uncompensated, although I cannot assess how much that error affects the relative rankings at Charity Navigator). Her salary is only about one-half that of the CEO of the Dana-Farber Cancer Institute, which is ranked slightly lower than Komen at Charity Navigator. Moreover, Ms. Brinker's salary amounts to only about 1.3% of Komen's total annual administrative expenses, which consume only 11.8 percent of total revenues (hardly an excessive figure).

In the final analysis, while Ms. Brinker appears to be relatively well paid for the CEO of a breast cancer charity, scant evidence exists to argue either that she is grossly overpaid or that her salary should present a substantial ethical obstacle for donors.

1 comment:

  1. Well done research in this highly polarized age.

    Thank you.


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