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Tuesday, October 17, 2017

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Dear Warren Buffett, You're a big name in two areas: smart business and charity...
Tom Ahern

October, 2014

You're a big name in two areas: smart business and charity.[1]

Could you settle an argument once and for all?
 
In your view, should charities pay competitive salaries, in an attempt to lure the best and the brightest?
 
Or should charities settle for the talent they can attract with below-market salaries and starved operational budgets?
 
A fan wants to know.
 

PS: Of course, Warren, there is one area where compensation in the nonprofit world is doing just fine, thanks: community foundation CEO compensation.[2]

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[1] Warren Buffett is famously one of the richest people on earth. But he is equally well known for his disdain of material excess, his wry commentary on the inequalities of capitalism, and his devotion to doing good. "I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate's distribution of long straws is wildly capricious." His 2006 charitable donation to the Bill & Melinda Gates Foundation was the largest in history. In 2010, alongside Bill Gates and Mark Zuckerberg, Warren Buffett introduced the "Giving Pledge," promising to give at least half his wealth to charity and inviting others to join as well. As of May 2014, 127 billionaires had signed the pledge.

[2] As reported in the Chronicle of Philanthropy, Sept. 21, 2014, the average community foundation CEO's total compensation (base pay and other compensation) was $416,091, for the 23 community foundations (CFs) reporting. (By comparison, the President of the United States makes $400,000 annually; while Warren Buffett, as Chair and CEO of Berkshire Hathaway, makes $100,000 a year.) Maybe surprisingly, the Baton Rouge Area Foundation led the list, with more than $1.3 million in total compensation for its CEO. NYC's CF CEO came in second; Silicon Valley's CF CEO third; and the original and oldest CF, Cleveland's, came in 4th in CEO compensation. Maybe my question to Warren Buffett answers itself at community foundations: when a charity has deep pockets, as many CFs do (in 2012, the Cleveland Foundation held total assets worth $1.87 billion), you invest in staff, especially leadership.


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