Are Nonprofit Procurement Industry Associations Only Profitable For Their CEOs? By Jon Hansen

Based on a 2013 study by Charity Navigator, and taking into account the regional differences relating to cost of living, the average (CEO) salary is $148,250 . . . 

In the spirit of fairness, I also wanted to see if there was any difference between the above referenced overall average, and the nonprofit category relating to the educational services that associations such as the NIGP provides.  Here is what a separate commentary on the same report had to say:

While location matters, so do categories: For example, Education ($170,178), Arts, Culture and Humanities ($159,650), Public Benefit ($142,661) and Health ($137,919) led to higher-paid CEOs, while Religion ($82,746), Animals ($104,816), Human Services ($114,000) Environment ($117,644) and International ($120,000) led to lower-paid CEOs.

The above is an excerpt from my April 30th, 2015 post “When It Comes To The NIGP, Just Follow The Money Mr. Hansen . . . Follow The Money”.

In gaining context relative to NIGP CEO Rick Grimm’s compensation, I used the Charity Navigator study as a reference point, because it encompasses nonprofit enterprises across multiple industries. I thought that this was important in that we could then view the numbers through a more defining lens from both within and external to the procurement world.

What I did not expect is that Grimm’s compensation would pale somewhat when compared to the compensation that the CEOs from similar-type organizations received. Especially given the latter group’s significant losses in terms of both dollars and, in the case of APICS, membership numbers.

According to their 990 Returns, APICS membership numbers dropped from 45,200 in 2006 to a low of 33,732 in 2009, rebounding slightly to 36,769 in 2013. This is a drop of almost 10,000 members or more than 20% of its membership base.

In addition to the loss in membership, APCIS also lost $4.4 million in 2008, and $1,7 million in 2009. Despite these losses in both membership and dollars, in 2009 their CEO Abe Eshkenazi, CSCP, CPA, CAE, was paid $367K.

Now to be fair, there have been some profitable years interspersed through the 2006 to 2013 period. However, and based upon the findings from the Charity Navigator study, one has to wonder what warrants compensation packages that; 1. do not seem to align with organization performance from the standpoint of membership and finances and, 2. are so far out of line with the pay scale for nonprofit CEOs across multiple industries.

Even the compensation of ISM’s former CEO Paul Novak now seems to warrant a second look.

This raises a number of interesting questions . . .

• How many of its members actually take the time to read their association’s 990 Returns? If they did, what would they think about these seemingly generous compensation packages, given that the average salary of a procurement professional in North America, according to a just released study from the Next Level Purchasing Association, is $79,027 per year.

• Why does the media that is supposed to be covering the procurement industry – including blogs – focus more on new program launches from these associations and their conferences, and seemingly ignore their financial viability. Whether anyone wants to ask the question or not, we need to seriously consider if money and/or membership challenges will lead to the making of more conflict of interest deals, such as the one between the NIGP and Periscope?

• Why can The National Association of State Procurement Officials “NASPO” per their 990 returns, deliver value to the public sector procurement industry, and do so without paying their executives, or for that matter anyone working for the organization, salaries. Is this a model that can and should be replicated across the procurement world?

• How will the up and coming Generation Next as I have called them, react to these generous compensation packages and conflict of interest deals? This is particularly pertinent when you consider that industry associations are trying to reach out to them in an effort to remain relevant. Or as I have heard with increasing frequency, “the new procurement professionals are not looking for the cozy fez and secret handshake experience” that they still associate with many of these organizations.

The following is the compensation range for the following CEOs between the years 2009 and 2011.

I could have chosen to use a broader range i.e. an earlier start year, but for the sake of a basic comparison I chose these years.  I would of course encourage you to examine all of your association’s returns through the following website; http://ift.tt/1naskIg

NIGP CEO Rick Grimm

2009 – $228,103

2010 – $240,197

2011 – $242,360

CSCMP CEO Rick Blasgen

2009 – $312,789

2010 – $339,380

2011 – $451,075

ISM (former CEO) Paul Novak

2009 – $328,254 (NOTE: I had to use 2008 figures as ISM’s 2009 990 Return did not list salaries)

2010 – $316,915

2011 – $353,394

APICS CEO Abe Eshkenazi

2009 – $367,648

2010 – $397,455

2011 – $432,873

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