In the world of Jewish not-for-profits, some executives are above average. Or, at least, above average in compensation.
A new list of overpaid heads of Jewish organizations is made up of well-known names, each viewed by his board members as being exceptional, and each compensated exceptionally well. According to an independent analysis of Forward data, the list includes, in ascending order, the Anti-Defamation League’s Abraham Foxman, Malcolm Hoenlein of the Conference of Presidents of Major American Jewish Organizations, Morton Klein of the Zionist Organization of America and Matthew Brooks, who runs the Republican Jewish Coalition.
Finally, Marvin Hier, the longtime head of the Simon Wiesenthal Center, is “by far the most overpaid CEO,” the analysis concluded, earning more than double the amount expected, given the size of his organization.
On the other end of the list stand the underpaid — executives in Jewish groups that could be earning twice their salary, but for various reasons are undercompensated. Unlike the overpaid, who are all men, there are two women among the underpaid, including the only woman to run any of the 18 largest Jewish federations in the United States.
The analysis, produced for the Forward by Abraham Wyner, a professor of statistics at the Wharton School at the University of Pennsylvania, built a model of predicted salaries for Jewish executives, based on the size of the organization each heads. This is the key criterion used by the federal government to assess salary levels in the not-for-profit sector.
The results shed light on the animating factor in determining salaries in some of the Jewish community’s largest and most influential organizations: It’s not about how large the group is — it’s about the power of the leader’s brand name.
“The size of the organization is typically the most telling factor,” said Linda Lampkin, research director at ERI Economic Research Institute, a company specializing in compensation analytics and salary planning. But those who defend the generous salaries in the Jewish communal world disagree.
Who Is Overpaid and Who is Underpaid?
Executives’ salaries are plotted against the size of the organization they run (blue dots non-Jewish, orange, Jewish). The higher the dot, the higher the salary, the further right the dot, the bigger the organization. The higher above the cluster the more “overpaid” the executive, the lower below the cluster, the more “underpaid” the executive. Use the cursor to see more details and click the year buttons to compare proportionate remuneration over time. (Credit: Pedro Moura)
“The idea that it is only about the size is ridiculous,” said Norm Brownstein, a prominent Denver lawyer and top Democratic donor who chairs the Simon Wiesenthal Center’s compensation committee. His committee decided to pay Hier, the center’s founder and dean, $751,054 in 2012, which according to the Wharton analysis represents a 113% overpayment for an organization with only 121 employees and $25 million in expenses.
“What about the prominence of the organization in the Jewish world? What about the stature of its leader?” Brownstein asked.
Hier, 74, founded the center 36 years ago, and has since built it into a 400,000-member national organization that operates a museum in Los Angeles and another being built in Jerusalem. It also works with state and federal authorities to educate civil servants on tolerance. As the organization grew, so did Hier’s compensation: His wife and one of his sons are also on the payroll.
In deciding Hier’s salary, the center’s board compared his pay with the top compensation offered by other leading Jewish groups: ADL, the American Jewish Committee, the American Israel Public Affairs Committee and the Presidents Conference. This choice reflects the group’s view of itself as being comparable in influence, if not in revenue, with the largest and most powerful organizations in the Jewish world. The board added considerations based on Hier’s seniority and fundraising accomplishments.
Similar considerations led the ADL to decide that 73-year-old Abraham Foxman, its national director, is worth $688,280 a year. Even for a $50 million operation with 417 employees, this figure is 70% higher than the predicted compensation level. Foxman, one of the most visible Jewish leaders, whose influence extends beyond the group’s original mandate of battling anti-Semitism and bigotry, has been one of the highest-paid Jewish executives for years.
“Abe is the face of the ADL,” said an ADL board member who asked not to be identified. “He brings in the donors, and he is the one invited to the White House when they want to talk to the Jewish community.” This special status could, the board member noted, explain the generous compensation, which has to do more with Foxman’s stature in the field than with his organization’s size.
The ADL declined to comment on this issue.
Lampkin said that the Internal Revenue Service does allow not-for-profit organizations to take into consideration other factors beyond size when determining executive salaries, including the competitiveness of the position and the leader’s fundraising abilities. The most important test for the board is being able to explain how compensation was determined based on data and information from comparable organizations. “It’s all about the thought process, and everything has to be within reason,” Lampkin said.
Salary levels, however, are rarely scrutinized by the IRS, whose resources for dealing with tax-exempt organizations are overstretched. It is the donors, therefore, that have the most influence in limiting excessive payments for top executives.
Morton Klein, 66, has been at the helm of the ZOA for almost two decades. The organization, known for advocating against the Oslo Accords with the Palestinians and for backing the Israeli settlement movement, runs on a small budget, slightly more than $3 million in 2012. It has 31 employees working on pro-Israel advocacy, campus activism and communal education. Klein’s salary last year was $435,050, 93% more than the predicted salary for an organization this size.
According to Klein, this payment represents, in part, compensation for his first five and half years at the ZOA, during which he worked for free. “I took over a bankrupt organization with no money in the bank and with very little activity,” Klein said. The ZOA has an unusual arrangement under which most of Klein’s salary is covered by a designated gift from one of the organization’s major donors.
Another small organization writing a big paycheck is the RJC. The $10 million, 17-employee group paid its executive director, Matt Brooks, $563,000 in 2012. This salary comes from two related organizations, the RJC and the Jewish Policy Center, an affiliated think tank. Brooks, 48, took over as executive director in 1990 and has been credited with growing the organization rapidly in recent years, thanks mostly to large donations from billionaire Sheldon Adelson.
While political success is hard to measure, the RJC views Brooks’s tenure positively, noting the 30% of Jews who voted for Mitt Romney in the 2012 elections. “We don’t think he is overpaid,” RJC treasurer Mark Lezell said. “We think he is worth every bit of it.” Lezell explained that the board determines Brooks’s salary after carefully considering comparable executives and taking into consideration his performance.
In a statement sent to the Forward, RJC Chairman David Flaum added, “Matt is worth much more than his salary.”
With a salary of $400,815 last year, Malcolm Hoenlein, executive vice chairman and CEO of the Presidents Conference, heads the smallest organization among the most overpaid. The Presidents Conference is an umbrella organization representing 52 national Jewish groups on policy issues relating to Israel. As such, it does not have a large operation of its own. It employed only four staff members in 2012 and spent $2 million.
Hoenlein and the group’s top lay leader, Robert Sugarman, did not respond to the Forward’s inquiries on this issue.
Hoenlein is one of the most powerful figures in the Jewish organizational world, and a former member of the Presidents Conference who would not be identified said this prominence explains his seemingly disproportionate compensation. Hoenlein’s salary comes from two sources: the Presidents Conference and its affiliated Conference of Presidents Fund, which shares the same board and professional staff but is free to raise funds beyond the dues paid by member organizations.
On the other end of the spectrum are the Jewish executives who, according to the Forward analysis, should be getting much more.
Jennifer Gorovitz, 48, was the first woman to head a large Jewish federation, and today she remains the only one. But breaking the glass ceiling as CEO of the Jewish Community Federation of San Francisco did not translate into an income equal to that of male federation leaders. Earning $311,000 for overseeing 117 employees and $134 million in expenses, Gorovitz is underpaid by 38% compared with the predicted salary in the Wharton analysis.
The San Francisco federation declined to comment.
Keshet, a group working for inclusion of lesbian, gay, bisexual and transgender Jews, has grown briskly in recent years. Compensation for its executive director, Idit Klein, 41, has grown a bit slower.
In 2012, Klein was paid $71,483 for overseeing 12 employees and a $1.4 million budget. Toward the end of the year, however, the Keshet board decided to adjust her salary significantly, raising it to $119,000. “When we became aware of the fact that our organization is growing and we invested in programs and staff but not in salary, the board decided to update my salary,” Klein said.
Robert Wexler, 62, has been serving as president of the American Jewish University in Los Angeles since 1992. The non-sectarian Jewish higher education institute runs a budget of $25 million and employs 728 faculty and administrative staff members, but pays its top executive a lower salary than expected. With $225,560 in 2012, Wexler’s salary is lower by 36% than the predicted salary.
Also on the list of underpaid Jewish executives is Scott Kaufman, CEO of the Jewish Federation of Greater Detroit. Kaufman, 47, was a real estate developer and a lay leader in the Jewish community before joining the federation. The federation spent $43 million in 2012 to provide services for the Jewish community of 80,000 in the city and its surrounding suburbs. Kaufman’s salary of $254,042 for running the organization represents a 36% underpay compared to the prediction.
While IRS rules prohibit not-for-profits from paying excessive salaries, there is no legal problem with underpayment. But, Lampkin said, “the organization should worry about being able to retain an executive who is underpaid.”
Rabbi David Zwiebel, 60, executive vice president of Agudath Israel of America, dispels this concern. He earns only $147,456 for running an $18 million organization with 451 employees. But for the former attorney, who left a high-paying career to head the group, this is of little concern.
“The rewards of trying to use one’s talents and energies to serve the Jewish community,” he said in an email, “extend far beyond monetary compensation.”