In the corporate world, where he began his career, Ivan Hand’s $1.7 million paycheck in 2013 wouldn’t be remarkable for a top executive.
But Hand leads a nonprofit whose mission is to help struggling debtors. The Houston-based organization, Money Management International, provides credit card repayment plans, bankruptcy counseling and home foreclosure prevention, among other services. Much of MMI’s income comes from the beleaguered debtors who come to it for help.
I looked into the pay of the heads of the top 10 nonprofit credit counseling companies as part of my reporting for the story, “Credit counselors turn to student debt.” The story describes how the nonprofit agencies, with their traditional sources of income drying up as the economy recovers, are pushing into student debt counseling.
MMI, and its executive pay, both stood out from the crowd.
Hand’s 2013 paycheck included $646,131 in base pay, a $660,000 bonus, $353,187 in other compensation, $30,650 in deferred compensation and $17,010 in nontaxable employment benefits. Of the total, $275,000 was deferred compensation earned and reported in previous years.
MMI is by far the largest nonprofit credit counseling agency, with a 2013 budget of about $75 million (2014 comparative figures are not yet available). So it isn’t surprising that Hand gets more than CEOs of the other big agencies. His bonus, however, put his 2013 pay far ahead of the pack. The next highest-earning CEO in the top 10 was Jane McNamara at Greenpath Inc. in Farmington Hills, Mich. She received $636,000 in total compensation that year, less than half of Hand’s pay.
Looking more broadly in the nonprofit world, Hand’s 2013 pay was in the top 10 percent of the largest nonprofits, based on 2012 data, the latest available. The data comes from the GuideStar Nonprofit Compensation Report, which is based on
91,000 nonprofits that file reports with the IRS. Of those, 3,048 are in
the over-$50 million size range that includes MMI.
In 2012, the pay tier for the top 10 percent of CEOs started at $1.2 million, according to the report. The median pay for the CEO of a nonprofit in MMI’s size group was $444,108, while the average pay was $663,500.
IRS rules say that nonprofit executives’ pay should be “reasonable.” Pay is assumed to be reasonable as long as the board uses “appropriate data” to compare executives’ pay to compensation for similar jobs. At MMI, a compensation committee of nonemployee board members sets executive pay. The committee uses a consultant’s survey, reviewed by a law firm, to determine comparable jobs.
When I talked to Hand on June 10, he said that the committee looks beyond other nonprofits when determining what’s a fair paycheck. If MMI had to replace him, they would consider executives in the for-profit sector as well, which is where Hand worked before joining MMI in 2000.
The committee sets his base pay below the median of the consultant’s salary survey, Hand said. The $660,000 bonus that boosted his 2013 pay was possibly the first bonus he received, and certainly the only one in recent years. It came as his contract expired and he reached retirement age. “In 2013 we had a conversation about performance over the last 12 years,” he said.
I also talked to Sandra Miniutti, chief financial officer of Charity Navigator, which tracks pay at nonprofits. Credit counseling agencies are difficult to compare to ordinary charities, which solicit donations from the general public, she said.
However, she questioned the practice of nonprofits setting their pay with an eye on for-profit companies. Nonprofit hospitals, for example, make the argument that they have to compete with their for-profit peers for talent. As a result, they often pay executives $1 million-plus wages. But “that brings up the question, why are you operating as a nonprofit,” Miniutti said.
Like a hospital, much of MMI’s income comes from the people it helps. Debtors paid about half the $46 million in debt counseling income that MMI made during 2013. (Creditors also chip in.) People having mortgage problems paid $4.2 million. Another $830,015 came from people in bankruptcy counseling.
Lately MMI is helping fewer people as the economy improves. That’s reflected in its 2013 revenue, which is down about a third from its peak in 2010. It has also laid off some credit counselors as the workload diminished.
“What’s reasonable in terms of pay gets very subjective,” Miniutti said.
But “presumably people are coming to the nonprofit sector because of
the public benefit aspect of it,” she added. “It’s not about getting