Ladner's Lavishness
posted on: Tuesday, October 11, 2005
The Benjamin Ladner compensation scandal at American University in Washington, DC once again shows why the Internal Revenue Service needs to establish better guidelines for nonprofit and foundation executive compensation, and why the US Congress needs to appropriate more funds for the agency’s tax-exempt oversight division.
American University itself, its trustees, Ladner, and the legions of attorneys representing all sides in the case have been arguing for months now over how much Ladner was actually compensated, what kind of compensation package the trustees approved, and whether his compensation was ethically and legally justifiable. Answers to these questions are not anticipated anytime soon.
The scandal also shows why foundations and nonprofits should bring diversity to their boards—and not just in terms of race and gender. Like most large nonprofits and foundations, many of the university’s board members are from the for-profit sector. Considering the lavish salaries most for-profit executives make, should they be setting compensation levels for the nation’s nonprofit and foundation executives? As Roy J. Nirschel, president of Roger Williams University, put it:
“Trustees and presidents move in similar social circles and can end up becoming friends. Combine those conditions with the fact that many trustees come from business, where lavish executive pay packages and rich perks are customary; it is only natural that they would want the chief executive of ‘their’ university, particularly if she or he is a personal friend, to enjoy the lifestyle of a CEO.”
It’s also interesting to point out that—once again—a nonprofit scandal was uncovered not by the IRS or other government oversight agency, but by an anonymous, inside whistle-blower.
The Washington Post has covered the Ladner case extensively, including a lengthy piece in today’s paper about American’s board of trustees ousting Ladner in a vote taken Monday night.
American University itself, its trustees, Ladner, and the legions of attorneys representing all sides in the case have been arguing for months now over how much Ladner was actually compensated, what kind of compensation package the trustees approved, and whether his compensation was ethically and legally justifiable. Answers to these questions are not anticipated anytime soon.
The scandal also shows why foundations and nonprofits should bring diversity to their boards—and not just in terms of race and gender. Like most large nonprofits and foundations, many of the university’s board members are from the for-profit sector. Considering the lavish salaries most for-profit executives make, should they be setting compensation levels for the nation’s nonprofit and foundation executives? As Roy J. Nirschel, president of Roger Williams University, put it:
“Trustees and presidents move in similar social circles and can end up becoming friends. Combine those conditions with the fact that many trustees come from business, where lavish executive pay packages and rich perks are customary; it is only natural that they would want the chief executive of ‘their’ university, particularly if she or he is a personal friend, to enjoy the lifestyle of a CEO.”
It’s also interesting to point out that—once again—a nonprofit scandal was uncovered not by the IRS or other government oversight agency, but by an anonymous, inside whistle-blower.
The Washington Post has covered the Ladner case extensively, including a lengthy piece in today’s paper about American’s board of trustees ousting Ladner in a vote taken Monday night.
posted by NCRP at
9:48 AM
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