Nonprofits a $500 million industry in Roaring Fork Valley
The Aspen-Snowmass area has so many nonprofits that its difficult to go one day without noticing them.We hear their commercials. We see their advertisements, attend their events and donate to their campaigns. If youre not a member of a nonprofit board of directors, then you likely know someone who is.For the discriminating donor who supports local nonprofits, the decision of where to contribute is no simple task. Consider these numbers: Aspen alone is home to more than 230 nonprofits, which accounted for nearly $145 million in total tax-exempt income in 2006, according to the website taxexemptworld.com. These nonprofits own tax-exempt assets totaling $345 million. Snowmass Village boasts more than 25 nonprofits that combined in 2006 for nearly $15 million in tax-exempt revenue and $16 million in tax-exempt assets. Seven nonprofits call the unincorporated community of Woody Creek home, with $4.6 million in revenue and $8.3 million in tax-exempt assets.All told, the upper valley is home to more than 260 nonprofit organizations which, when combining their latest annual revenue and assets, amount to an industry worth more than $500 million.It also takes people to run these nonprofits, and an Aspen Times survey of more than 200 of these organizations tax returns, known as Form 990s, shows that paychecks for administrators range from below $10,000 to nearly $400,000.A medley of factors are used to determine an executives salary, ranging from the areas cost of living to job performance. Nonprofits also are pressured to stay competitive with the private sector by hiring top-notch talent. Likewise, those in charge of these nonprofits must have management experience and business savvy.
The majority of the salaries here, other than the ones that arent special-skills related, are based on the market value, says Jennifer Elliot, the financial director of the Music Associates of Aspen, or MAA, the nonprofit that runs the Aspen Music Festival & School. The board takes specific steps and looks at comparable institutions when making a decision [about compensation].MAA, in fact, is the most generous of all upper-valley nonprofits when it comes to employee salaries, with seven of its staff members cracking the Top 25 list (see chart), according to a review of the most recent tax returns available. Alan Fletcher, who joined the MAA on March 1, 2006, combined with his predecessor, Don Roth, to earn $395,713 for the tax year beginning Oct. 1, 2005, and ending Sept. 30, 2006.That was tops on the list, followed by Jazz Aspen Snowmass President Jim Horowitz ($190,221), Elliot ($166,164), Aspen Art Museum Executive Director Heidi Zuckerman Jacobson ($154,035), and former Rocky Mountain Institute CEO Amory Lovins ($160,833).Horowitz, who launched Jazz Aspen Snowmass in 1991, turned it into a nonprofit in 1993. I started humbly, he says. And this is my thing, its what I do. Its not just for the money. But the money is good, its just not everything.
Government scrutinyAs salaries rise and the number of charitable organizations continue to swell nationwide, nonprofit compensation has drawn closer scrutiny from Congress and the IRS in recent years. Congress last major overhaul of nonprofit regulation came in 1969, and in 2004 it began moving toward another overhaul. Earlier this year the IRS released the first two parts of its Executive Compensation Initiative Project, which it launched in February 2004 to send a signal to the nonprofit industry that it planned to take a harder look at administrative pay and benefits.The IRS reported significant reporting issues exist, and that of the nonprofits it put under its compliance check, 30 percent of them had to amend their Form 990 tax returns. Additionally, the IRS determined it had to further examine another 15 percent of the participants in its compliance check. In February, the IRS released its Good Governance Practices for 501(c)(3) Organizations, which states: Charities should generally not compensate persons for service on the board of directors except to reimburse direct expenses of such service … Charities may pay reasonable compensation for services provided by officers and staff.How that compensation for staff members is determined, notes Sandra Miniutti, a vice president with New Jersey-based nonprofit watchdog Charity Navigator, is up to the board of directors that oversees the nonprofit.There are not hard and fast guidelines of what a salary should look like, says Miniutti. More or less theres very little regulation in the nonprofit sector by our government. When the organization is setting a CEOs compensation they should be reasonable.Donors, Miniutti says, should do their homework. They should be proactive.Most important, Miniutti says contributors should look into whether the nonprofits they want to support are delivering on their goals, and they should not shy away from giving to a nonprofit if its CEO or executive director draws a handsome paycheck.Rick Carrolls e-mail address is email@example.com.
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