This story was originally published in the Observer on October 8, 2009.
Concerns about his rising financial compensation during tough economic times have prompted evangelist Franklin Graham to temporarily give up future contributions to his retirement plans at the two charities he leads.
As president of the Billy Graham Evangelistic Association and Samaritan's Purse, he receives two full-time salaries and two retirement packages. Last year, his total compensation from the two Christian ministries was $1.2 million.
The size of Graham's total 2008 compensation - $535,000 from Samaritan's Purse and $669,000 from Charlotte-based BGEA - drew questions from nonprofit experts interviewed by the Observer. They doubted that one person - even the energetic, globe-trotting Graham - can do two full-time jobs leading organizations that employ hundreds and spend hundreds of millions around the world.
As head of the Boone-based Samaritan's Purse, Graham earned more last year than any other leader of an international relief agency based in the United States. That includes eight with larger budgets, according to data compiled by GuideStar, a group that monitors nonprofits.
Graham, 57, and his two boards of directors pointed out that most of his 2008 compensation came not from increases in his salaries, which have remained flat in recent years, but from accelerated contributions to his retirement. Graham received no retirement his first five-plus years at Samaritan's Purse and first year at the BGEA. The boards said they were playing catch-up and hoping to satisfy his goal of working for free when he reaches age 70.
In addition, Graham and the boards said, nearly half of what he received last year from BGEA - $300,000 - was deferred retirement money that had been committed and reported over three previous years. Under new IRS rules, which have affected other nonprofit CEOs, the money had to be reported as a lump sum in 2008, the year Graham became eligible for the money.
Even with that $300,000 - plus accrued interest - taken out, Graham's compensation at BGEA rose 21 percent in 2008, from $250,000 to $303,000. The median increase for CEOs at the nation's biggest charities in 2008 was 7 percent, according to an annual survey released last week by the Journal of Philanthropy.
Graham acknowledged last week that his compensation total "looks terrible" and that "people won't understand it."
News of his pay hike comes only months after BGEA laid off more than 10 percent of its staff.
On Tuesday night, several days after the Observer began asking questions about his compensation, he asked the heads of the two ministries' compensation committees to cut off contributions to his retirement plan "for the time being."
The evangelist and his wife, Jane, "are grateful to the (boards) for these contributions to my future retirement, but in the current economic climate I don't feel good accepting such retirement make-up provisions," he said in a statement e-mailed to the Observer.
Explaining to employees
Graham spokesman Mark DeMoss said "the (BGEA) compensation committee believes the overall compensation approved for Franklin was appropriate (and did not ask him to alter it), but Franklin believes the impression given by these somewhat unusual reporting procedures is not a good one.... If or when the economic situation improves significantly, he will consider accepting contributions to his retirement plan."
On Wednesday, Graham sent a memo to the two ministries' employees explaining his intention to halt contributions to his retirement plans.
Samaritan's Purse, a group Graham has led since 1979, has funded his retirement for 2009, DeMoss said. So, he said, payments will be suspended for 2010.
At the BGEA, Graham will receive no retirement payments for 2009, DeMoss said.
Since 2005, BGEA revenue has fallen from $126 million to $93 million. Last year, the BGEA reported an 18 percent drop in revenue - the result of a dip in the sales of products such as books and lower returns on endowment funds. Fifty-five layoffs followed in February. The BGEA consolidated some departments and outsourced housekeeping and groundskeeping.
Largely as a result of its financial challenges, it has gotten two out of a possible four stars from Charity Navigator, a group that measures how efficiently and effectively non-profits operate. Samaritan's Purse, which saw its revenue climb last year, got four stars, the highest possible.
Graham said the BGEA cuts were part of a restructuring that amounted to good stewardship of donations. "We saved almost $1 million" on lawn-keeping alone, he said.
But Rick Cohen, a charity watchdog who writes for Non-Profit Quarterly, said Graham's compensation increase in dire times for nonprofits offers the wrong message.
"It sends a signal to the public," he said, "that is not representative of what the (nonprofit) sector is facing."
Groups OK'd compensation
At Samaritan's Purse, Graham's compensation grew about 3 percent from 2007 to 2008.
Still, his total compensation of $535,000 was higher than the $421,000 paid to the president of World Vision International, a relief agency with a budget four times as large.
According to a joint statement last week by the boards at Samaritan's Purse and BGEA, Graham's pay and retirement were "researched and approved by our respective compensation committees, along with an opinion from an outside compensation expert as to reasonableness."
The 20-member BGEA board includes Graham and four members of the Graham family - father Billy, son Will, sister Anne Graham Lotz and cousin Melvin Graham - but none are members of the compensation committee, DeMoss said.
The two boards, in their statement, also saluted Graham for his leadership, service and the "effective ministry he directs around the world."
Both organizations spend millions to evangelize and help people in need at home and abroad. Both recently sent rapid response teams to the Atlanta area to aid and counsel families victimized by flooding.
At Samaritan's Purse, Graham champions Operation Christian Child, which sends millions of shoeboxes filled with gifts to needy children around the globe, and will leave next week for trips to North Korea and China.
And, like his world-famous father, Graham gives sermons at frequent crusades - he calls them festivals - around the country and the world. In September, he held a festival in Colombia, and, over the summer, staged "Rock the River"- a series of rock concerts and sermons for young Christians living in cities along the Mississippi River.
Charity watchers skeptical
Some charity watchers said they know of no other instance where one person leads two such large organizations. And they wondered whether it was possible to effectively do so.
"It's a very strange and somewhat unique situation ... and it raises questions," said Ken Berger, president of Charity Navigator, the nation's largest evaluator of nonprofits.
Pablo Eisenberg, a senior fellow at the Georgetown Public Policy Institute, said: "How can you do two full-time jobs at the same time? It's outrageous."
Noelle Barton, manager of special projects at the Journal of Philanthropy, said she couldn't think of another example in her newspaper's annual survey of nonprofit leaders' compensation of one person wearing two CEO hats. "It's definitely not the norm," she said. "They're big jobs."
Graham spokesman DeMoss pointed out that if BGEA and Samaritan's Purse were to merge - an idea that's never been seriously considered, he said - the resulting organization would be the 33rd largest nonprofit in the United States.
"So, there would be 32 nonprofits bigger," DeMoss said. "You could ask how one person could run the Salvation Army, which has a budget of more than $1 billion."
Asked about how he juggles the positions, Graham said, "You work a little bit all the time. It's not a 9-to-5 job."
He said he often works into the night at his Samaritan's Purse office in Boone, works every weekend and works at his home, "answering phone calls, thinking about it, strategizing."
DeMoss estimated Graham spends five or six days every month at his BGEA office in Charlotte.
"The BGEA had about a 40- to 50-year history and track record ... before Franklin took over," DeMoss said. "He didn't have to invent the wheel or create the ministry. He's giving leadership to it."
And because of the nature of the BGEA - a ministry named for his father - leadership doesn't just mean management, DeMoss added. "The other role is preserving the vision and mission.... It's very important that a Graham carry that out."
'It was awkward'
In last week's interview, Franklin Graham told the Observer that money is not what drives him.
He said it was one board, then the other, that kept insisting - as he moved from his 30s to his 40s and now 50s - that they had to move aggressively to provide for his retirement after starting late. It wasn't until 1985, his sixth year at Samaritan's Purse, for example, that the board started a 401(k) for him, DeMoss said.
When Graham became president of BGEA, "it was awkward," Graham said. "I already had a salary (from Samaritan's Purse). They felt it was important to pay something." In 2002, his first year on the payroll, his compensation was $85,000.
Graham said the $300,000 in deferred retirement he had to re-report gives a falsely inflated impression of how much his compensation has grown. He said he worried that it could put off donors and other supporters of his ministries.
"Nothing's been done that's bad," he said. "It's a perception issue - but in the nonprofit world, you have to be careful of perceptions."
Instead of adopting the deferred retirement plan at BGEA, he added, it would have been better "to take a bonus every year."
But Graham said he has always felt overpaid. "I enjoy and love what I do," he said. "It's not a job, it's a calling. ... I'd do it for nothing." Staff researchers Marion Paynter and Maria David contributed.
Franklin Graham's role: President and CEO.
His total compensation in 2008: About $535,000.
Mission: To help the world's "poor, sick, and suffering" with food, medicine, and other assistance - all with the ultimate purpose of "sharing God's love through His Son, Jesus Christ."
Number of employees: 477.
2008 revenue: $309 million.
2008 expenses: $295 million.
Billy Graham Evangelistic Association
Franklin Graham's role: President.
His total compensation in 2008: About $669,000.
Mission: To proclaim the Gospel message: "God so loved the world that He gave His one and only Son, that whoever believes in Him shall not perish but have eternal life."
Number of employees: 490.
2008 revenue: $93 million.
2008 expenses: $108 million.
Source: IRS returns and Web sites of the two organizations.