About a third of the organization's budget goes to pay the president's salary, approved by a five-person board that includes his brother. And we track down the source of its funding.
The Philadelphia Inquirer (Andrew Maykuth) spotlights the compensation of Matt A. Peskin, the founder and president of the National Association of Town Watch (EIN 23-2186642 Form 990), which since 1984 has promoted the annual event National Night Out, held this year on August 7.
The 2005 Form 990 shows that Mr. Peskin received $255,000 in salary and $42,000 in benefits. It also shows that the organization has just three employees, while the article contends that there is just one other employee, plus seasonal staff.
The organization makes the largest chunk of its income from sales of a little over $1 million in t-shirts, banners, hats, and other stuff with the National Night Out logo, which it owns.
In addition, the organization annually receives $295,000 from the Department of Justice. What the article fails to mention is that this grant is the result of an earmark (aka pork) from Pennsylvania Senator Arlen Specter (as is spelled out in this 2001 press release available through Google cache). The article claims that NAoTW spends $77,500 a year (listed in Schedule A) for the services of the lobbying firm Apco Worldwide in order to secure this earmark. (Why they need so much money for to get Sen. Specter to renew the earmark is a bit of a mystery to me.)
Mr. Peskin was surprisingly candid about the way in which his salary is set:
"I can't go by what somebody else makes," said Peskin, 53, who got his start as the unpaid editor of the Lower Merion Town Watch newsletter. "I just go by what I think I deserve and the amount of time I put in. I think I do a good job. I'm the one who put all this together, put the concept together, sold it at the beginning."
In addition to Mr. Peskin, the board of NAoTW includes Mr. Peskin, his brother Hal (whom the article claims is paid $20,000, unconfirmed by the Form 990), and four others who are said to be family friends.
As far as time the president puts in, the 2005 Form 990 says 100 hours per week, but the previous year's form simply says 100%, so that may be just a transcription error.
I found this story by a mention in Jack Siegel's blog Charity Governance. Mr. Siegel thinks that the
salary is justified based on supposedly comparable salaries of for-profit firms. Yet the article points out that the 2007 salary survey of NonProfit Times reports that the average salary for a similarly sized nonprofit is $70,000 (though it's actually $90,000 if you based the comparison on the gross income of the organization including the t-shirt sales).
It seems to me that:
- In contrast to Mr. Siegel's view, the high compensation level of some nonprofit CEOs is a result of the unequal bargaining power between boards and CEOs, not a result of arms length bargaining in a competitive marketplace (as it is with other highly paid individuals, like sports stars, that Mr. Siegel cites).
- Mr. Peskin is another example of an issuepreneur—someone who has
found that they can make a living as the spokesperson for an idea they
have come up with.
- And this case illustrates the internal control difficulties that can arise with founders and other extremely long-tenured staff.