Charity officials pay deemed 'appropriate'

Children's Miracle Network co-founder Mick Shannon says he wasn't paid any salary for most of its first year in 1983 — because the then-fledgling charity couldn't afford it. He did better in 2006, the year he retired.

He was paid $501,467 then for salary, benefits and expenses, according to tax forms the Utah-based nonprofit group filed (and are available on GuideStar.org). President Bush's salary that year was $400,000.

Some other Children's Miracle Network executives didn't do too badly that year either. Jim Hall, who replaced Shannon as president and CEO, was paid $333,404. Chief Operating Officer Scott Burt was paid $363,071. Radiothon President Bob Lind was paid $301,020. Chief Marketing Officer Craig Sorensen was paid $276,160.

Exact pay for most other officials was not included on tax forms, but they report at least 47 other employees were paid more than $50,000 each. That was the last year for which the charity says it has filed a Form 990 with the Internal Revenue Service.

Most members of its board of directors — including entertainers Marie Osmond, Jimmy Osmond and John Schneider — served without pay.

The charity says that while such compensation may seem high, it is appropriate for a nonprofit of its size, which it says raises $237 million a year for children's hospitals.

"We believe all of our wages are absolutely within the market for being competitive and appropriate for each position," said Hall, the charity's current president. "If you are going to recruit talent, you have to do it competitively."

Some organizations that study nonprofits agree that its salary levels are in the right ball park, but it depends on how the Children's Miracle Network is grouped among other charities.

Such grouping is complicated by the fact the network says it does not touch most of the money it raises. Instead, it has local hospitals directly collect pledges from the network's telethons and other fundraisers. In contrast, most traditional charities raise money themselves and then distribute it through grants to others.

Meanwhile, the network raises its own operational funds by contributions specifically for that purpose from corporations, and by fees paid by hospitals to participate. None of the money for network salaries and operations comes from donations made through telethons, the group says.

Shannon said that is unique among charities. "The IRS actually had to come sit down with us because they had never seen an organization like ours," he said.

A study by GuideStar, the Urban Institute and the Foundation Center of salaries by nonprofits from 2001 to 2003 said the median compensation for top executives of foundations that gave more than $50 million a year was $525,516 — or more than what Shannon made in 2006.

Of note, the CEO of the charity for St. Jude's Research Hospital — a group similar in scope and purpose to Children's Miracle Network — was paid $528,971 in 2005

But a different GuideStar study looked at compensation by budget size. Expenditures by the Children's Miracle Network in 2006 were about $17 million. The study said nonprofit CEOs with budgets about that size were paid an average of $138,038 in 2002.

Hall said the Children's Miracle Network should not be compared to that group because most other nonprofits include in their budget the money they raise and distribute, while his charity does not.

Of note, the U.S. Bureau of Labor Statistics also reports that the average salary of CEOs for any corporation (nonprofit or for-profit) in 2007 nationally was $151,370 — but that includes corporations both small and large.

Charity Navigator — which ranks charities for potential donors based, in part, on how much of what it raises actually goes for charitable programs — gives the Children's Miracle Network a three-star rating out of a possible four stars.

It says that means it "exceeds or meets industry standards and performs as well or better than most charities in its cause."

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E-mail: lee@desnews.com