In 2023, the highest-paid CEOs of Minnesota nonprofits – who claim to raise money for a public good – received annual salaries as high as $5.5 million. Yet the basis of a nonprofit is that it is not meant to generate a profit for its owners like a typical business; instead, the money it makes is used for the benefit of the public. It’s also important to note that nonprofits are tax exempt, so when donation money meant to fund the organization’s mission goes into the pockets of its leaders, it defeats the purpose of a nonprofit.
Typically, nonprofits are created to combat issues like poverty, hunger, misinformation and climate change – and the list goes on. Revenue from donations and grants are used to fund events, activities, volunteer services and, of course, the executives. In many cases, the money going to these executives is much more than is necessary for them to perform their duties as head of the organization.
While the amount of revenue generated by most Minnesota nonprofits is quite significant compared to what their CEOs make, the difference is still incredibly notable. For example, according to the Minnesota Star Tribune, John Naylor of Medica, who resigned in September 2023, was the highest-paid CEO of a Minnesota nonprofit in 2023 yet worked for an organization that was only number five on the list of total revenue per nonprofit.
The problem goes deeper than only the CEO salaries: sometimes it has to do with the whole group. At Fairview Health, employees are paid significantly less than the head of their organization. Some employees, dissatisfied with the situation, met without their CEO to discuss the issue and possible paths to take.
Some argue that nonprofit CEOs’ salaries are important in creating an organization that works effectively for a public good. They believe that leaders need to be paid sufficiently in order to choose employees who are willing to work diligently for the organization’s mission. But while it’s beneficial to employ hardworking, dedicated staff, CEOs can do so just as easily without the excess pay.
Despite the organization advocating for taxpayer funding, the CEO of Harvest Heartland, Allison O’Toole, earned $721,000 a year until she stepped down in April. The organization’s mission was to combat hunger across Minnesota, assisting those without enough money to eat. With so much of the money going to her instead of funding that mission, many Minnesotans felt deceived, sparking controversy within the taxpayer community.
Board member and radio celebrity Jason DeRusha stood by the amount O’Toole was being paid, but said he was willing to reconsider future CEO salaries. Public disapproval of her salary continued, and many lawmakers even spoke out, arguing that a leader of an organization modeled toward ending hunger should not receive a salary of nearly five times that of Minnesota Gov. Tim Walz.
CEO salaries should not be as high as they are in so many Minnesota nonprofit organizations. It goes against the mission of any nonprofit because when donations and grants go to one person, the goal cannot be accomplished as well as it could. The funding received is for the organization, not the leaders, who should be doing it for the benefit of the public, not for the pay.