Tuesday, August 15, 2017 by Jack Craver

Report shows compensation for nonprofit leaders

A report provided by city staff sheds light on how much top executives of Austin nonprofits get paid.

The document was prepared in response to a budget question submitted by Council Member Ora Houston, who wanted to know how much the leaders of organizations that receive city funding earn per year. The salaries reported were based on publicly available 990 tax forms that nonprofits submit annually.

By far the highest salary included was that of the executive director of Southwest Key Programs, an Austin-based group that has operations in seven different states that provide services, such as job training and shelter, to at-risk children, including immigrant children separated from their parents. Its CEO and founder, Juan Sanchez, was paid $659,076 in 2015, the last year for which the information is available.

That same year, the organization reported just under $159 million in revenue, making it by far the largest among the nonprofits getting city funds.

Staff was sure to point out on the report that the $15,000 grant that Southwest received was earmarked specifically to support the Latino Arts Preservation Program. It could not have been used for the group’s general operations, including salaries.

Cindy Casares, a spokesperson for Southwest Key Partners, said that Sanchez’s salary was much smaller than those of leaders running similarly sized organizations. His salary only amounted to 0.3 percent of the group’s revenue for the most recent fiscal year, she said. The organization conducted a survey of 25 similarly sized nonprofits last year and found that the average executive director’s salary accounted for 0.54 percent of revenue.

The next highest salary came from Goodwill Industries of Central Texas, which receives city funding to support the services it provides low-income and homeless people. The city document lists the salary of its president and CEO, Gerald Davis, as $420,651, which was his salary in 2014. The organization’s most recent 990 form from 2015 shows his annual pay rose to $435,316.

A spokesperson for Goodwill did not respond to a request for comment.

Among the other nonprofits that receive city money, there is a great degree of variation in terms of executive compensation.

On one end of the spectrum are small groups that don’t have full-time employees. The Austin Symphonic Band, for instance, only reported $53,758 in revenue in 2015. It paid its business manager $4,832 for some part-time work.

On the higher end is the Contemporary Austin museum. The organization took in $7.3 million in 2015 and paid its top official, Louis Grachos, $312,000.

What a nonprofit can do with funds it receives from the city varies based on the situation. For instance, while there were 18 groups that received cultural arts contracts from the city Economic Development Department that can be used for a variety of organizational expenses, including salaries, the more than 100 other groups that got cultural arts funding only got it to use on specific projects.

However, critics of nonprofits receiving government funds often argue that any money that is provided to an organization is essentially helping to pay for all of the group’s activities, not just the ones authorized by the contract. Perhaps the most prominent example comes from the national debate over Planned Parenthood, whose opponents contend that federal funding for cancer screenings and other uncontroversial services that the group provides allows the organization to devote more of its private dollars to abortion.

Speaking to the Austin Monitor on Monday, Houston said she requested the information in May and was just interested in getting a sense of how much city-funded groups were paying their leaders.

Houston has frequently raised concerns that “legacy nonprofits” that the city has funded for years prevent new, smaller groups from competing for taxpayer dollars. In particular, she worries that groups that are tailored to minority groups don’t receive the attention they deserve.

“Those are the kinds of groups that just don’t have a chance in this kind of environment,” she said.

Photo by Trey Perry made available through a Creative Commons license.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

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