Don't Judge A Nonprofit By Its CEO Salary

Don't Judge A Nonprofit By Its CEO Salary
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Aid critics use short-sighted arguments to justify cutting life-saving aid for childhood vaccines.

Aid critics use short-sighted arguments to justify cutting life-saving aid for childhood vaccines.

World Health Organization

Update: Gavi reached out to correct the salary figures provided by Ian Birrell and re-quoted in this piece. Gavi’s CEO, Seth Berkley, received £220,000 base compensation in 2014, not £623,370, as was originally stated. The article has been updated to reflect this.

The Mail on Sunday published an article over New Years weekend condemning Seth Berkley, the CEO of a major global health organization, as “the fattest charity fat cat of them all.” Ian Birrell, the author of the article, argues that Berkley’s pay package is irreconcilable with the mission of helping the global poor.

This criticism, frequently launched by aid critics, unfortunately fails to grapple with or even acknowledge the possibility that higher salaries in the aid industry could improve CEO performance and attract better talent. Although the evidence of the effect of higher salary on improving productivity and finding better talent claims is certainly more mixed than one would hope, Birrell’s article doesn’t attempt to broach this complexity at all.

Birrell’s criticism also reveals a common mistake when we talk about the “do-gooder” sector: misguided attention to inputs, rather than outputs. Instead of allowing organizations to determine how they can most effectively spend their money themselves and judging their performance based on results, critics like Birrell would rather focus on the narrowest examples of what they consider waste and fraud. This spending ― rarely put into financial proportion or given proper context ― often amounts to a small fraction of what we spend improving the lives of the poor. However, these examples are then often generalized to an entire sector in order to justify slashing donor funds that support life-saving aid.

Of course, corruption, mismanagement, and waste are all problems deserving of attention. However, minimizing these problems should not weaken our ability to alleviate poverty and improve health, as it does in Birrell’s example. When we apply the correct standard of focusing on results, Birrell’s criticism looks even more misplaced. Just one month ago, Seth Berkley’s organization, Gavi, received the highest possible rating in the United Kingdom’s annual Multilateral Development Review. Gavi is frequently complimented by the UK’s own assessment of global development organizations for demonstrating “strong value for money and a high degree of transparency.” Why, then, does Birrell’s article focus so strongly on Berkley’s salary, which makes up less than 1% (0.0002%, to be precise) of pledged donations to the organization in 2010-2015?

I can’t pretend to know Birrell’s inner monologue, but his past writing displays a longstanding interest in cutting foreign aid budgets. Birrell was, in fact, quite pleased when the UK government moved £12 billion in foreign aid to military spending as a direct result of conservative complaints. Of course, military spending in the UK is subject to the exact same criticism Birrell applies to foreign aid, probably even to a worse degree. What’s so frustrating about Birrell’s argument is that it’s often premised on taking the most egregious examples of expenditures out of context and concluding that they resemble the vast majority of the aid industry. But they do not: since 2000, Gavi has vaccinated over 450 million children, preventing 8 million deaths in the process.

I won’t deny that overpaid consultants are a problem in the development community ― Birrell’s instinct is correct here. However, it’s important to maintain a sense of proportionality ― overpaid consultants simply aren’t the primary reason that global poverty and disease still plague us. Moreover, when global health organizations offer high salaries for their CEOs, this reflects a desire to invest in talent. This is fundamentally different from when rent-seeking development organizations fight between themselves to win contracts without caring about how much they improve the lives of the poor. Whether higher salaries pays off in better CEO performance is a worthwhile pursuit for any journalist ― and indeed, one that I hope Birrell takes up ― but we should not shame “do-gooder” organizations for making investments that can improve the quality of their work.

If we are to eliminate poverty and reduce the burden of disease in the global south, journalists, implementers, and multilateral organizations must remain focused on results. Importantly, we must give organizations themselves the ability to make decisions about how best to allocate their resources. While the development sector has a multitude of problems worth highlighting, high CEO pay simply should not rank very highly as a concern, if it is one at all.

Correction: Ian Birrell’s original article was published in the Mail on Sunday, not the Daily Mail. The author regrets the error.

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