Shrimp brings this up because Diakon is the subject of a resolution coming before the Lower Susquehanna Synod Assembly going on right now. A resolution that caught the notice of York (Penn.) Daily Record which yesterday headlined its story, "Lutheran conference questions nonprofit pay of $1M."
The headline for the brief story in The Patriot-News of Harrisburg, Penn., is a bit more pointed: York Lutherans question $1 million paid to social services executive. But back to the York Daily Record:
A local congress of Lutherans wants to know why the top executive of a large, church-affiliated social services agency has a compensation package topping $1 million.The Daily Record reports that Pastor McKee's benefits are nearly all pension related.
In 2006, the Rev. Dr. Daun E. McKee, CEO and president of Diakon Lutheran Social Ministries, collected $385,947 in salary, $582,925 in benefits and a $63,591 expense account for a total $1.03 million, according to tax records.
McKee's compensation topped all other nonprofit executives in the region, according to the Central Penn Business Journal.
Diakon officials defend McKee and other executives' pay, saying compensation at Diakon is appropriate and competitive and helps attract and retain leaders who are critical to meeting the organization's goals.
The local Lutherans also expressed concern about compensation for two other Diakon executives who ranked Nos. 4 and 5 on the Journal's list of nonprofit compensation in the midstate:
· Mark T. Pile, chief operating officer, $418,499 in compensation
· Richard M. Barger, chief financial officer, $385,546 in compensation
On Saturday, the York Conference of clergy and lay representatives of the Evangelical Lutheran Church in America will take the data to a nine-county church assembly. They want the body to approve a resolution asking Diakon directors to explain their philosophy on executive pay.
In the resolution, the York Conference cites the Lutheran confessions, Scripture and church social policy, which calls for lessening the disparities between pay for top executives and those under them....
A charity of the ELCA, Diakon is a 2,300-employee nonprofit organization that operates 50 sites, including 12 senior-living communities, in eastern Pennsylvania, Maryland and Delaware.
Diakon provides social service programs such as health care, nursing and rehabilitative care, adoption services and programs for at-risk youths to 70,000 clients a year. Its administrative offices are in Mechanicsburg and Allentown.
During McKee's tenure, Diakon's budget has grown from $35 million at the organization's founding in 2000 to nearly $200 million. Its assets total $500 million.
Leadership of such a complex organization "requires a level of expertise, a level of commitment and certainly a sense of mission in order for the organization to carry out its mission," said Susan Schellenberg, chairwoman of the board of directors.
Because of its size and good management, the charity can afford to provide about $1 million per month in free or discounted services to clients who can't pay full price, Schellenberg said.
"My feeling is if you believe in the organization, what you need to do is tout its mission and not get hung up on executive compensation," she said, referring to the York Conference.
"I think the focus is wrong. There is nothing untoward here. There is nothing that flies in the face of any social statement of the ELCA."
Diakon officials said compensation to the three executives was higher in recent years because it included pension payments to the executives' employee retirement plans that were deferred from 1996 through the early 2000s.Hmm. Shrimp is a bit curious about how all that has been appearing on Diakon's audited financial statements, as well as the federal income tax consequences of such a compensation package, we'll point you read the entire article here and let you see what kinds of questions come to your mind.
During that time, the organizations that later formed Diakon were involved in a series of affiliations, mergers and acquisitions, requiring the board's attention and extensive discussions, officials said.
Once the new organization became more financially stable, the board focused on funding McKee's pension plan - a promise made when McKee was hired in 1995 by Lutheran Services Northeast, one of the two agencies that created Diakon in 2000 - officials said.
McKee's pension pay in particular is higher because of his age - he'll be 65 this month - meaning Diakon has less time to make up the earlier unmade contributions.
In 2006, 98 percent of the $582,925 McKee received in benefits was for retirement/pension plans, and the remainder for medical and other insurance, officials said.
And if you're not in an ELCA synod that Diakon is affiliated with, you may be interested in this section:
Compared with 50 years ago, nonprofit management is more challenging and complex in an environment of increased competition and regulation, especially in the health care industry, said Jill Schumann, president and CEO of Lutheran Services in America.You might remember that next time your local ELCA-related social services agency comes asking for money from you or your local legislator.
The Baltimore-based network of 300 Lutheran health and human service agencies recommends its members use an external consultant and compare salary data with organizations similar in size, services and complexity when setting executive pay, Schumann said.
At least 11 of the network's larger agencies - those with budgets of more than $50 million - reported in a survey last year they have executive salaries of more than $250,000.
"It's really interesting to see that nonprofit compensation is evolving to look like for-profit organizations over time," Schumann said.
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