united way

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UNITED WAY: A CEO BATTERS A GIANT NONPROFIT
United Way and the Impact of William Aramony’s Actions
Discussion Question 1: Position Regarding Aramony’s Compensation and Perks There are a couple of different ways to analyze William Aramony’s compensation package. The United Way, a large nonprofit organization, considerably increased its charity contributions under Aramony’s leadership. At the peak of Aramony’s tenure, the organization’s contributions reached $3 billion. Aramony contributed greatly to making the United Way the largest and most respected charity in the United States. One of the arguments for Aramony’s extravagant compensation - $463,000, or nearly double the salary of the next highest paid nonprofit executive – is that executives in the private industry are compensated based on their performance. However, this argument is unsound because nonprofits operate under different assumptions. An individual aspiring to lead a nonprofit should understand that the tone at the top and the organization’s interests are paramount to its success. For example, when deciding whether or not to contribute to a nonprofit organization, people consider many factors such as executive compensation. Therefore, a nonprofit executive needs to consider the charity’s interests first and strive to keep administrative costs low. Furthermore, nonprofit executives should be wary of their own salaries and benefits packages. This does not mean that executives should not be compensated fairly, but they should be compensated in line with compensation packages offered by similarly sized charities. Most importantly, if an individual in an executive position is in it for the money, he or she should enter the private sector. However, if this individual is truly interested in helping people, he or she should be cognizant of the salary and perk limitations within nonprofits. If an executive’s goal is to increase the nonprofit’s funding, he or she needs to realize that...