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Vadim Lavrusik Rss

Nonprofit journalism startups’ executive pay: How much is too much?

Posted on : 01-22-2010 | By : Vadim Lavrusik | In : Business, Online Journalism

Tags: , , , , ,

16

Bay Area News Project’s CEO Lisa Frazier has a $400,000 salary, which reminds me of the news and criticisms about Paul Steiger getting $570,000 to run ProPublica. This begs the question: how much is too much in the pay of top execs at nonprofit journalism startups.

A lot of the defense for such high pay is that these are people who are very qualified and some earned much more at previous jobs (where they also managed larger operations). Look at the many startup models where the CEO or founders don’t get paid all that much until the model is proven sustainable financially. Why should journalism startups be any different?

It also begs the question of sustainability in the longterm. In the PaidContent article, the headline read that the project is about creating jobs for journos. How many more jobs would be created if the CEO salary was half what it is? I’m guessing about 4. Also, the reason why founders of startups often opt to take a similar pay to their employees is to create a sense of community and camaraderie. They’re all on the same level in a sense. The way a lot of these journalism startups are taking the old corporate model of many news companies.

ProPublica raises similar questions.

ProPublica, an investigative nonprofit newsroom, is facing its own funding challenges. The company received a little more than $8.5 million in donations and grants in 2008, according to its IRS disclosure. The majority of its funding comes from a three-year funding commitment from Herb and Marion Sandler of up to $10 million a year.

The likes of Dan Gillmor, director of Knight Center for Digital Media Entrepreneurship, have criticized the company’s salary structure. On his website, Gillmor pointed out Steiger’s $570,000 salary, along with other top people at ProPublica.

According to the IRS 990 form, the managing editor Stephen Engelberg pulled in a $325,000 salary. Though this is still less than what Steiger earned at the Wall Street Journal, the average pay for a CEO of a nonprofit in New York is roughly $220,000, according to Charity Navigator’s 2009 survey of CEOs at medium to large nonprofits.

“They can spin it any way they want, but they can’t really justify this kind of pay for people at a relatively small nonprofit ,” Gillmor said in the post. Gillmor said in the post that he believes it will hurt ProPublica’s efforts in the long run.

It does take resources to do quality journalism, but the expense should be spent on the efforts of creating a sustainable model. This probably means the days of high-paid news CEOs are over. The revenue should be able to justify the pay. What are your thoughts? How much is too much?

Comments (16)

NO, IT DOES NOT BEG THE QUESTION, GODAMMIT!

Well, they're being funded by donors right? I think the CEOs need to be transparent about their salaries but as long as the donors keep giving, who are we to complain? I do hope, though, that that these CEOs are working toward building sustainable local media models. It's traditionally been that journalists get paid dirt but I think paying media professionals what they're worth is a good thing.

The figures cited seem a bit high. I know the standard argument is that the market for talent sets the compensation levels. That's certainly the chime in corporate America. Non-profit is a bit different, and I'm surprised that lean news orgs would launch with payroll at that level right off the bat. I believe incentives and creative compensation for superior performance make sense; tying traffic, growth or other metrics to bonuses might be a better approach.

Their salaries are legal, so whether or not it's too much is based purely on opinion which will undoubtedly vary a great deal from person to person. Should the model be proven to be sustainable in order to justify such salaries? Probably. I don't know if they are, or how they arrived to the number that they did though, so I can't really give an opinion on whether or not the salaries are justified.

I can just hope that the salaries are in fact justified, and that it won't hurt ProPublica's efforts.

David
Community Manager, Scribnia.com

I think that a good determining factor is looking at other similar nonprofits and how much their CEOs get paid, which in Propublica's case is much more.

Nice post. Those salaries are far too high to justify in a non-profit media organization.

Vadim, while I agree these salaries are exorbitant, part of your logic is faulty.

Startup CEOs don't take low pay out of some sort of magnanimous sentiment for the employees — they are making a calculated investment, one that they hope will pay off with big bucks on acquisition or IPO.

There is no such potential upside for the nonprofit head. Current cash comp is all there is. So the comparison is apples and bowling pins.

That said, I know I couldn't look my constituents in the eye with that kind of comp at a nonprofit.

The crux of the problem is that these businesses aren't “charities” in the classic sense. They accept donations from those who want to see their work furthered. And they don't have to deliver a cash return. In every other way, including staff pay, they are businesses. It's a semantic variation — not the fault of those involved, per se. Perhaps the LPC is a more intellectually honest model.

I'd love to see more journalists making six-figure incomes. But this is ridiculous, especially when they're both nonprofit AND startups. Bootstrapping is the name of the game for both.

I'm on the steering committee for the San Francisco Public Press, another nonprofit startup, and we've been operating full newsrooms — rent, staff, everything — on a tenth of those salaries. And we've been able to cover some great stories. Our latest, working with a Pulitzer Prize journalist, made the cover of the San Francisco Panorama.

Imagine what our newsroom could do just with the salary of one of those highly paid execs. It's obscene. $400k could be much more wisely spent on, you know, journalism.

Nice post. Those salaries are far too high to justify in a non-profit media organization.

Vadim, while I agree these salaries are exorbitant, part of your logic is faulty.

Startup CEOs don't take low pay out of some sort of magnanimous sentiment for the employees — they are making a calculated investment, one that they hope will pay off with big bucks on acquisition or IPO.

There is no such potential upside for the nonprofit head. Current cash comp is all there is. So the comparison is apples and bowling pins.

That said, I know I couldn't look my constituents in the eye with that kind of comp at a nonprofit.

The crux of the problem is that these businesses aren't “charities” in the classic sense. They accept donations from those who want to see their work furthered. And they don't have to deliver a cash return. In every other way, including staff pay, they are businesses. It's a semantic variation — not the fault of those involved, per se. Perhaps the LPC is a more intellectually honest model.

I'd love to see more journalists making six-figure incomes. But this is ridiculous, especially when they're both nonprofit AND startups. Bootstrapping is the name of the game for both.

I'm on the steering committee for the San Francisco Public Press, another nonprofit startup, and we've been operating full newsrooms — rent, staff, everything — on a tenth of those salaries. And we've been able to cover some great stories. Our latest, working with a Pulitzer Prize journalist, made the cover of the San Francisco Panorama.

Imagine what our newsroom could do just with the salary of one of those highly paid execs. It's obscene. $400k could be much more wisely spent on, you know, journalism.

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