Top people in some Las Vegas charities make close to $300,000

It was a wake-up call to board members who had been lackadaisical about their duty to watch how much they paid the people who actually ran the charities.

Board members of 501(c)(3) charities can now be fined personally for approving employee compensation that is too generous. But there’s no exact definition of how much is too much when it comes to paying the CEO of a charity. There’s no formula, no set rules.

The organizations that got walloped with fines were not identified by name because of privacy rules, but the problems included excessive salaries, overpayments for services, and compensation that wasn’t reported, such as payments for vacation homes, personal legal fees, personal vehicles, meals and gifts.

This IRS scrutiny of charity compensation is the outgrowth of the scandal involving United Way in the 1990s, where top executives misused charity funds like they were slush funds and the board let them. As part of that reform, the 990 forms nonprofits must submit (and which are public) were made clearer in 2008, so top salaries and benefits are easier to see and compare. The emphasis is on reporting all compensation that the highest earners make. Questions about potential conflicts are far more specific than they were before. This to prevent the abuses of the past.

But again, no one can say how much is too much to pay the top dogs in a charity.

Suzanne Coffman of GuideStar, the leading watchdog over nonprofit organizations, said working for charities “doesn’t necessarily mean you’ve taken a vow of poverty. … It boils down to any tax-exempt organization has to justify to the IRS how it established that level of compensation.”

That’s a pretty heavy hammer, especially since any audit of a charity now includes a review by the IRS on executive compensation.

Thus, there are charities in Las Vegas where top people are making close to $300,000. They’re making more than officials who run Clark County and the city of Las Vegas, more than our governor and our senators.

If it matters to you how much goes to CEO compensation, it’s easy enough to find out. Go to www.guidestar.org and register for free. Then look at the 990s posted for the past three years. The compensation for the CEO, other top executives and the five highest paid employees are all there. You can look at the money raised and the money spent. How much goes to programs and how much to administration? The answers are there and if it doesn’t meet your standards, move on to a charity that does.

If you don’t have a computer, Coffman recommended, “If you don’t know the organization, talk to people who do. Is the organization accomplishing its mission? Does it do what it says it’s going to do? Is the literature all flowery with no facts?”

She also recommended avoiding organizations that pressure you to give. Never give over the phone. Never give in response to an e-mail, especially from an organization you don’t know. Most ethical organizations don’t raise funds through e-mails because they’re so easy to fake.

There are donors who are concerned specifically about how much the charity operator makes. On Monday, I look at three Southern Nevada nonprofit CEOs who each made more than $250,000 in 2008 … and why their boards say they’re worth it as they manage multimillion-dollar operations.

Jane Ann Morrison’s column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call (702) 383-0275. She also blogs at lvrj.com/blogs/morrison.