Many of Charlotte’s highest-earning nonprofit executives saw bigger paychecks and better benefits in recent years, outpacing the rate of pay increases for the average U.S. worker.
Among the top 10 earners in Charlotte are the president of a Christian television network, who collected more than $800,000 in 2016, and several business or trade group executives who claimed nearly half a million dollars each in pay and benefits.
At large nonprofit organizations, compensation often includes more than just a salary. Many executives also receive generous retirement fund contributions and year-end bonuses. Some get country club memberships and housekeeping services.
In Charlotte, eight of the top 10 earners have seen their compensation rise in recent years, with most getting raises that exceeded the 3 percent average for U.S. workers in private industry. Three got pay bumps of 10 percent or more.
Federal law prohibits charities from awarding excessive compensation to their leaders. But the federal government does little to monitor nonprofit pay, leaving charities free to pay as they see fit, experts say. Taxpayers and charitable donors pay the price. Each year, charities across the U.S. get tax breaks worth tens of billions.
Most nonprofits in North Carolina pay their top executives less than $100,000 annually, data show.
But among the largest nonprofits — those with budgets of more than $50 million — the average compensation for CEOs in North Carolina was about $497,000, according to a study by Guidestar, a group that publishes financial data from nearly 2.7 million nonprofits in the United States.
Although the word “nonprofit” conjures up an image of a charity, it has a much broader meaning for tax purposes. Nonprofits paying the most to executives in Charlotte span a range of interests — from a private school to groups that help electrical companies with regulatory compliance.
Most of the information comes the tax forms that nonprofits submit to the IRS. The Observer also used data compiled by Guidestar.
The Observer’s database does not include churches or government groups (IRS reporting rules are different for these tax-exempt groups). Earlier this year, the Observer published information about local for-profit CEO salaries and hospital executive pay at Novant Health and Atrium Health.
For this list of nonprofit executives, the Observer used the latest compensation figures available. All of the data is current through 2016 or 2017.
Televangelist continues to draw hefty pay
Topping the list is David Cerullo, president of the nonprofit Inspirational Network Inc.
Cerullo also heads INSP television, a for-profit religious cable and satellite TV network owned by the Inspirational Network. The Inspirational Network launched in 1990, when David Cerullo’s father, Morris Cerullo, bought the assets of Jim and Tammy Faye Bakker’s PTL cable television network out of bankruptcy.
INSP broadcasts from Charlotte to a worldwide audience and receives donations from its viewers. Some televangelists who appear on the network suggest that God will cancel debts and bring financial breakthroughs to those who make contributions.
For many years, Cerullo has been No. 1 on the list of the highest-paid nonprofit leaders in the Charlotte area. His pay now comes mainly from the ministry’s for-profit enterprise, which in 2016 provided $2.45 million in total compensation. The nonprofit Inspirational Network supplemented his compensation by $819,709, which includes a housing allowance.
Cerullo’s son, Benjamin Cerullo, received $300,032 from the nonprofit for his work as an executive vice president.
Ronn Torossian, a spokesman for the Inspirational Network, said David Cerullo doesn’t participate in any decisions about his own salary or the compensation of family members. His pay is determined by an independent committee, which compares his compensation to that of leaders of similar organizations, Torossian said.
“The Board of Directors recognizes that Mr. Cerullo manages a complex, multi-faceted organization and he is compensated fairly,” Torossian said.
For the past several years, Cerullo’s compensation has fallen, according to the organization’s tax returns.
That comes as Inspirational Network reported declines in contributions and more than a $20 million drop in revenue since 2014. In 2016, the organization reported about $32 million in revenue.
The Observer examined CEO pay at more than 70 nonprofits nationwide with annual revenue similar to that of the Inspirational Network ($30 million to $35 million). Only one CEO in that category earned more than Cerullo in 2016.
“The CEO’s compensation is certainly at a level that we encourage donors to do additional research before they give,” said Larry Lieberman, chief operating officer for Charity Navigator, a group that rates nonprofits.
Charitable grant groups make the list
At No. 2 and No. 3 are two of Charlotte’s most well-known charitable organizations: the Foundation For The Carolinas and the Duke Endowment.
In 2016, Michael Marsicano of the Foundation For The Carolinas or FFTC was compensated a total of $673,029, which included a base salary of $441,664 and a bonus of $110,000. That was a 6 percent compensation bump over the previous year.
At the Duke Endowment, President Rhett Mabry received total compensation and benefits of about $646,340 in 2017, according to the Duke Endowment.
“Those salaries (at FFTC and Duke Endowment) are not out of line with what other similarly sized organizations pay all across the country,” said Aaron Dorfman, CEO of the National Committee for Responsive Philanthropy, a group that monitors charitable foundations. “That doesn’t mean it’s right. But it is what everyone else is doing.”
While more pay and more benefits are the trend, Dorfman says that’s partly because nonprofit organizations use data from comparable groups to determine executive compensation — creating a cycle of higher pay and more benefits.
Tara Keener, FFTC’s vice president for marketing and communications, said the foundation pays a consultant to perform a market analysis and compensation survey before Marsicano’s salary is approved by FFTC’s board of directors. One of those recent surveys, from the Council on Foundations, found that similarly sized foundations paid their executives an average of $590,000 in base salary, Keener said.
Marsicano has been FFTC president since 1999, and he’s often credited with the foundation’s accelerated growth. FFTC is now the nation’s sixth-largest community foundation, managing nearly $2.5 billion in assets that benefit other nonprofit causes and charities.
The Duke Endowment, meanwhile, notes that it takes no money directly from contributors or members of the public. Instead, it’s a grant-making organization that provides funding to other nonprofits via the investments from James B. Duke’s philanthropic gifts. Duke established the endowment in 1924 with a $40 million gift. The next year, his estate expanded the endowment with a $67 million gift.
The Duke Endowment primarily funds higher education and health care causes in North and South Carolina. Many of its grants go to colleges, hospitals and organizations serving children.
Private school headmaster among top-paid
The headmaster of one of the area’s largest private schools comes in at No. 4 on the list.
Mark Reed, who leads Charlotte Country Day School, had compensation totaling $557,499 last year. That included a salary of $416,965 in addition to retirement benefits, a housing allowance and housekeeping service.
Todd Gorelick, chairman of the Charlotte Country Day School board, said the school aims to attract and keep the best leader it can find.
“And we benchmark compensation annually to insure it is competitive with regional and national peers. For nine years, Mark Reed has done an exemplary job for Country Day, and we firmly believe his compensation is appropriate,” Gorelick said in a statement to the Observer.
Country Day’s peer institutions in Charlotte, Providence Day School and Charlotte Latin, provided similar perks to their headmasters. At Providence Day, head of school Glyn Cowlishaw received total compensation of $435,386, which included $371,792 base salary, country club dues, a housing allowance and housekeeping service. At Charlotte Latin, Arch McIntosh received a total of $431,525, which included $388,455 base salary and a paid membership to a meals-only social club.
Each of these private schools provide annual scholarships for a portion of their students and report using comparable compensation data from similar institutions to set headmaster pay.
Electric grid execs earn big in Charlotte
Two Charlotte-based nonprofits serving major electricity providers are next on the list.
At No. 5 is former CEO of SERC Reliability Corporation, Scott Henry. Henry, a former Duke Energy executive, ran the nonprofit for six years.
His total compensation was $533,846 in 2016, when he left the organization to start his own consulting firm, also serving major electricity providers. The year he left, Henry was paid a $122,664 bonus and a severance payment of $227,326.
Henry’s replacement at SERC also makes the highest-paid list. Gary Taylor, No. 10 on the Observer’s list, collected total compensation of $452,406 in 2016, the latest year for which figures are available.
A spokesperson for SERC did not respond to the Observer’s phone calls seeking comment. The organization monitors major electricity providers in 16 states, including North Carolina.
At No. 6 is the leader of another electrical industry organization: the North American Transmission Forum, a collaborative group of energy transmission operators that focuses on service reliability, industry standards, and helping operators comply with federal regulations.
In 2016, NATF President Tom Galloway received total compensation of $521,899, most of which came from a base salary of $342,500 and a $97,545 bonus.
Galloway’s responsibilities and expertise warrant his compensation, says Dan Pudenz, of the NATF board. NATF’s members control 90 percent of the electrical load in the United States and Canada, and Pudenz says the general public benefits from the organization’s work to improve system reliability and service.
At No. 7 on the list is George Prest, the leader of another industry-specific trade association. In 2016, compensation for the Material Handling Industry CEO came to $493,748, which included a $374,266 salary and $64,052 bonus.
MHI is an industrial business-to-business trade association that runs major manufacturing and supply chain trade shows and year-round programming and support to its for-profit members. MHI is based in Charlotte but has members and influence nationwide.
As a nonprofit, MHI seeks to “increase the overall awareness of the industry that allows our members to grow their businesses and shape the future of the industry,” says Carol Miller, MHI’s vice president of marketing and communications services.
Charlotte Chamber’s president gets big bonus
At No. 8 is Bob Morgan, president of the Greater Charlotte Chamber of Commerce.
Morgan’s total compensation in 2016 came to $468,923, which included a salary of $304,309 and a $120,000 bonus.
The Charlotte Chamber acts as the “chief recruitment agency” for business and industry for Charlotte-Mecklenburg, according to the organization. In the last decade, it has announced 614 projects that it says led to the creation of 56,000 new jobs and $4.8 billion in capital investment.
Although the Chamber receives no government funding, it often weighs in on public projects and policy in support of transportation, education, neighborhood development and arts needs in and around Charlotte.
To determine Morgan’s pay, the Chamber’s board studies comparable compensation at other chambers of commerce as well as for-profit businesses, according to information provided by Chamber officials.
Blumenthal leader brings in $465,000
The president of Blumenthal Performing Arts came in at No. 9. In the tax year ending in 2017, Tom Gabbard’s compensation totaled $465,339, which included $394,488 in salary and a $42,570 bonus.
Blumenthal board chair Jeffrey Hay said the organization gets advice from national compensation consultants to ensure that Gabbard is paid fairly compared to his peers. Gabbard is recognized as a national leader in the performing arts, serving on the board of the Broadway League and as president of the Independent Presenters Network, Hay noted.
“Every time there’s an opening in an arts center, we know (Gabbard) is on the short list,” Hay said. “We know he’s very happy in Charlotte. And we take pains to make sure he’s happy.”
David Raynor, Gavin Off and Rick Rothacker contributed.
How we reported the story
To compile its lists of the highest paid nonprofit leaders in Charlotte and in North Carolina, the Charlotte Observer used data from Guidestar, a group that collects information on thousands of nonprofits. The newspaper also checked that data with the latest available tax returns that nonprofits filed with the Internal Revenue Service.
The Charlotte Top 10 list includes five nonprofits designated as 501(c)(3) organizations, groups that the public typically refers to as charities.
Charities are exempt from paying most taxes, and most of them rely heavily on tax-deductible donations for support. This group of charities includes the Inspirational Network, the Foundation for the Carolinas, the Duke Endowment (which does not accept donations from the public), Charlotte Country Day School and the Blumenthal Performing Arts Center.
The list also includes four 501(c)(6) groups, nonprofits that include business leagues and industry trade associations. These nonprofits are also exempt from paying federal corporate income taxes, but charitable donations to them are not tax deductible. The 501(c)(6) organizations on the list are SERC Reliability Corp., the North American Transmission Forum, Inc., Material Handling Industry and the Greater Charlotte Chamber of Commerce.
The IRS prohibits nonprofits of all kinds from paying their leaders excessive compensation. But the agency does not provide specific guidelines or formulas to define what constitutes excessive pay.