Generous or Excessive Salaries at Accion?

I was scanning the 2014 Charity CEO Compensation Guide published by Charity Navigator. It’s an interesting read. Needless to say the numbers were substantially higher than what I earn, and occasionally seemed distasteful to me. “We know that many donors continue to be concerned by what they believe to be excessive charity CEO pay”. The median CEO salary across 2,582 charities was $120,396. I thought it would be higher. In general larger charities have better-paid CEOs, which seems reasonable. The study reviews a total of 3,929 charities and finds only 12 CEOs earning in excess of $1 million. They conclude:

“While it is true that the paychecks of some nonprofit executives are outrageously high, this study confirms that those receiving excessive pay are in the minority… We recognize that many donors will be hesitant to agree that the CEO of their favorite charity deserves a six figure salary.”

So, I thought I would check the executive salaries at Accion, the masterminds behind “financial inclusion” powerhouses such as Compartamos and MiBanco. They also run the Smart Campaign, the closest thing the microfinance sector has to a self-regulator. Whether this might represent a serious conflict of interest is a topic that has apparently evaded the sector, discussed elsewhere.

So, taken directly from pages 8 and 39 of the publicly available 990 Form (2012), here are the 11 highest-paid people in Accion.

Enrique Ferraro, Managing Director, Accion Investments in Microfinance, $1,233,192

John Fischer, CIO, $964,419

Esteben Altschul, COO, $479,701

Catherin Quense, Sr VP, $478,836

Michael Schlein, CEO, $468,439

Mary Chaffin, General Counsel, $281,977

Brian Kuwik, Regional Head Africa, $265,724

Livingston Parsons III, CFO, $263,931

Elizabeth Rhyne, Sr VP, $251,084

Donella Rapier, CDO-CAO $230,955

Diego Guzman, Regional Head Latin America, $224,758

This is basically the sum of base salary, salary from related organizations and other compensation. The total remuneration of these 11 people was $5.14m. Call me stingy, but these seem quite high salaries for 35 hour weeks (as stated in the 990 Form). To put this into perspective, were he to work 35 hours per week, Enrique Ferraro netted a little over $700 per hour worked. Michael Schlein, CEO, was the fifth highest earner, not even reaching $0.5m. Beth Rhyne, creator of the ill-fated Smart Campaign, earned a paltry $0.25m, under $150 per hour.

Of course this omits the bumper payments to former Accion director Maria Otero, who earned $2m during the IPO of Compartamos.

The source of this money is not so clear. Obviously most comes from their profitable activities in microfinance, which means it is directly or indirectly paid in interest and fees from low-income clients; but Accion actually receives donations on top of this. On their website are listed the following supporters:

Bill & Melinda Gates Foundation, Citi, Credit Suisse, Deutsche Bank, FMO (Dutch government funding), Ford Foundation, IDB, IFC, Mastercard, UPS and Visa.

“Our supporters are critical to advancing our mission of giving people the financial tools they need to improve their lives.”

Are these salaries high? Is this “outrageous”, to coin the phrase used by Charity Navigator? Does this sit uncomfortably with the (some would say extortionate) interest rates charged to the poor by Accion’s microfinance banks? Yunus himself likened such activities to loan sharking, and commenting on the Compartamos IPO suggested “They’re absolutely on the wrong track…. Their priorities are screwed up.” I wonder if there isn’t something rather distasteful about selling financial inclusion as the solution to poverty while charging triple-digit interest rates to poor Latin Americans and Africans to pay such salaries to senior management. Another question of course is: should these people be running the Smart Campaign, whose claim is to act as something between the sector’s ethics committee and its self-regulator? Guess whom Smart just awarded with their certification? Compartamos! Potential conflict of interest here?

Leave a comment below, send me an email, or if you’re green with envy, maybe go get a job at Accion.


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2 Responses to Generous or Excessive Salaries at Accion?

  1. Hugh,I used to work for Accion – as Chief Investment Officer, to be exact – before resigning in mid 2009 to focus on \\”Access to Life\\” (health, housing, education, food, clean water etc) as opposed to \\”Access to Finance\\”. My total compensation was never high enough to be listed on the 990s, reaching a peak of 5k in 2008, the last full year I spent at Accion. Before you object to that number, let me add that I have a Masters in Social Change and Development from SAIS, an MBA in finance and strategic planning from Wharton, tons of experience with different instruments (debt, equity, quasi-equity, funds) and I work in four languages. A Russell Reynolds study that came out while I was at Accion suggested that my compensation was roughly 40% of market for my skills and experience. You can argue (and I\\’d agree) that market comp in finance is excessive in many cases, but that isn\\’t a good indicator of whether I personally (or the position I occupied) was fairly compensated. What should non-profits do when they need complex skill sets – (1) try to pay something related to market rates; (2) find someone who has retired, or has a trust fund or is for some other reason able and willing to work for sub-market comp; or (3) doesn\\’t have the experience needed but sounds ok on paper and will accept sub-market comp? Worth considering is how the answer to this question affects performance and outcomes! Your post, although interesting, is also deceptive. You quote the median salary of a non-profit CEO, but what is the average non-profit size? When I left Accion, it was one of the 25 largest non-profits in the USA, with a program budget in the tens of millions. I haven\\’t had reason to look up the data recently, but last I did, the average US non-profit had a program budget of US million or less. Do the CEOs of million dollar organizations get paid as much as the CEOs managing million organizations? I don\\’t think so! While I personally think Michael Schlein\\’s salary is offensive — and I think you could perhaps make a case that it is excessive if you were to compare it with peer salaries, that\\’s not what was presented here.For Enrique Ferraro and John Ficher, I presume part of the large comp numbers is due to the wind-down/sale of Accion Investments, which they managed throughout it\\’s ten year existence. They would have been entitled to carried interest pay-outs at close, but I\\’m not sure there is a place on a form 990 to explain how a for-profit fund belonging to a non-profit would pay carried interest. If you look at form 990s in previous years, you will still find Enrique and John on the list, but at lower numbers. The 2007 form 990 shows Enrique was making about 0k and John about 5k. Sure, five years have gone by and maybe everyone got big raises after I left. Then again, maybe 2013 included one-off events that will never be repeated. The real problem that I had – and still have, more so now reading your post – is that some of the inner circle at Accion was doing quite well, but that didn\\’t trickle down to most of the staff. The more that Accion and similar non-profits move into investment work (microfinance, impact, social enterprise, etc), the stronger the need for different skill sets and more equitable compensation practices. I\\’d love to see the salary of the CEO pegged to a multiple of the lowest salary level. When the CEO wants to increase his/her salary, they\\’d have to increase everyone else\\’s salary as well, in order to maintain the prescribed multiple! I applaud you for wanting to look at issues of fair compensation but would encourage you to compare apples and apples, as opposed to looking at mixed fruit :-)

  2. Henry Bartram says:

    Hi, I have just stumbled across your website – good work, tackling some of the tough issues. I run a small MFI in Zimbabawe and do not know much about what is going on among the big boys so I do not have a strong view about Accion etc. You wonder whether their top people are overpaid. Well, we do not pay bonuses of any sort – I just do not think that they are helpful and can often be undermining. Our intention with pay is to ensure that people get paid enough so that money does not cause resentment or anxiety. Fairness is a key concept. I believe that after a certain point, increases in pay do not have much impact upon performance. I believe that this is true of most people – not just in the non-profit sector. Most people want a sense of self-worth within an activity that is intrinsically worthwhile. (And I used to work in corporate finance!) Of course, it is hard to say what that point is but even in the greedy west it is not more than $100k or maybe $200k. This means that any amount above this is probably wasted. This suggests to me that the Accion people are probably paid more than is necessary. I do not really have a ‘moral’ point of view on this – I just think that the diminishing marginal utility ideas I learnt so long ago come into play here. Best wishes, Henry.

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