News

Jewish Charities Oppose Salary Cap

By Josh Nathan-Kazis February 9, 2012

New York Jewish charities are lining up against a new rule aimed at curbing executive salaries at not-for-profit organizations that get state funding, even though it likely won’t affect any Jewish groups.

Governor Andrew Cuomo’s order, which would cap at $199,000 the amount of state dollars that could be used for an executive’s salary, would likely not impact most Jewish institutions because they don’t rely exclusively on state cash, experts said.

But New York Jewish charity officials are pushing back anyway, because they question the focus on compensation at charities.

“Excessive compensation paid to a few nonprofit executives, particularly when paid from limited state dollars, represents a waste of resources that could be devoted to program services,” UJA-Federation of New York stated in testimony it submitted to the state Senate along with four major non-Jewish charity umbrella groups opposed to the reforms. “An extensive set of tools… already enables New York State to identify those cases and address them.”

The groups added that they see no evidence that the problem of excessive executive compensation at state-funded not-for-profits is “widespread and persistent.”

Cuomo’s move comes amid a wave of broader efforts at charity reform in New York, where headlines over the past year have disclosed high-profile examples of mismanagement at state-funded not-for-profits.

Supporters and opponents of the current effort agree that it won’t do much to rein in salaries.

The executive order caps at $199,000 the amount of state funds that can be used to compensate an executive at a not-for-profit. The order also requires that three-quarters of state funds given to a not-for-profit be used for operating expenses as opposed to administrative costs.

But the regulations would allow not-for-profits to pay officials out of other revenue streams, such as grants, donations, city or federal funding, and fees for services.

“There are many ways of getting around it,” said William Josephson, former head of the Charities Bureau of the New York State Attorney General’s Office, of the salary cap. “Nevertheless, it’s a positive step.”

Daniel Kurtz, who also once led the Charities Bureau, disagreed.

“I don’t think you have to pay people millions a year, but there is a real marketplace, and this is a clumsy interference with it,” Kurtz said.

In Florida, a similar bill moving through the statehouse, would limit compensation at less than $130,000 for groups that get more than two-thirds of their budget from the state.

Salaries of top professionals at leading Jewish communal institutions can range as high as $700,000, according to an annual survey published by the Forward last December. The highest salary of a New York-based Jewish official included in the Forward’s 2010 survey was that of Jerry Silverman of the Jewish Federations of North America, who earned $625,000.

Silverman and other big Jewish not-for-profit earners in the state, like Steven Schwager of the American Jewish Joint Distribution Committee and John Ruskay of UJA-Federation of New York, would not be affected by the new limits, as their organizations do not receive state funding.

William Rapfogel of the New York-based Metropolitan Coucil on Jewish Poverty, earned $435,000 in 2009, including benefits and deferred compensation, and his organization took in nearly $100 million in government funding, including contracts with state agencies. But his salary wouldn’t be impacted, either, as he can be paid out of other revenue streams.

Contact Josh Nathan-Kazis at [email protected] or on Twitter @joshnathankazis

Josh Nathan-Kazis is a staff writer for the Forward. He covers charities and politics, and writes investigations and longform.

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