How much do big education nonprofits pay their bosses? Quite a bit, it turns out.
The Securities and Exchange Commission recently finalized a rule forcing businesses to share data with workers that expose how much more their chief executives make than they do.
In that spirit, let’s take a look at the compensation of the chief executives of three very large education non-profit organizations heavily involved in standardized testing — the College Entrance Examination Board, known as the College Board, which owns the SAT college admissions exam and the Advanced Placement program; the Educational Testing Service, which administers the SAT and AP exams for the College Board as well as other assessments for other organizations); and ACT, Inc., which owns the ACT college admissions and also is responsible for other tests and programs.
It’s easy to mistake big non-profits such as these as for-profit companies, because they operate in similar fashion. They pay their top people a lot of money, charge fees for their services, make investments, market and lobby legislators. So how well do their executives do financially? Pretty darn well, it turns out. And many of their subordinates do just fine, too.
According to the latest publicly available 990 tax forms filed to the IRS by the three organizations, which operate under 501(c)3 tax exempt status because of their declared educational missions:
- Kurt Landgraf, now the former president and chief executive officer of the Educational Testing Service, earned for the 2013 fiscal year ending Dec. 31, 2013: $1,307,314 in reportable compensation and $42,210 in estimated other compensation from the organization and related organizations. [See the ETS 990 here.]
- Jon Whitmore, the chief executive officer of ACT, earned for the 2013 fiscal year ending Aug. 31, 2014: $672,853 in salary, plus a bonus of $150,000, and other reportable compensation of $12,949, plus retirement contributions of $57,152, plus other nontaxable benefits of $18,109. That’s a total of $911,073. [See the ACT 990 here.]
- David Coleman, the president and chief executive officer of the College Board, as well as a trustee, earned for the 2013 fiscal year ending June 30, 2014: $690,854 in reportable compensation plus $43,338 in other compensation from the organization and related organizations. Total: $734,192. (Coleman, a co-author of the Common Core State Standards in English Language Arts, joined the College Board in 2012, and was new in his job). [See the College Board 990 here.]
High compensations at big non-profit organizations are permitted by the U.S. tax code. Major hospitals and research institutions are tax-exempt non-profits, as, in fact, was the National Football League for decades. (The NFL announced earlier this year it was ending its tax-exempt status, which, according to this Washington Post story, means that it will have to pay taxes on its income but “will no longer have to file yearly tax forms that publicly disclose details like executive pay, including for Commissioner Roger Goodell, who made $44 million in 2012.”)
A spokesman for the Internal Revenue Service said agency officials would not discuss the issue of tax-exempt status for the College Board, the ACT and ETS. But Marcus Owen, an attorney who was the director of the Exempt Organizations Division of the Internal Revenue Service for 10 years, said that non-profit organizations can pay their chief executives what “comparable institutions would pay for similar services under similar circumstances.” He said, “You can’t say $100,000 is too much or too little or just right without knowing more,” adding that non-profits that exceed market rates for compensation purposes are required to pay an excise tax.
In 2007, the Iowa attorney general’s office wanted the IRS to review the salaries of the Iowa City-based ACT after The Des Moines Register disclosed that ACT was paying board members more than 98 percent of nonprofit corporations nationally and that some ACT board members received more than $40,000 annually to attend four meetings. The ACT remained nonprofit.
Spokesmen for the College Board, the ETS and ACTs said that executive compensation experts help them set salaries for their leaders. Tom Ewing, director of external affairs at the Educational Testing Service, said:
ETS’s executive compensation, including for our president, is informed by guidance from expert independent compensation consultants and relevant market data for similar executiveHow much do big education nonprofits pay their bosses? Quite a bit, it turns out. - The Washington Post: