Tuesday, August 18, 2009

Urban Child Institute CEO's Pay Draws Fire...

By Ryan Poe
The Memphis Commercial Appeal

Saturday, August 15, 2009

Local nonprofit organization The Urban Child Institute saw the value of its securities portfolio drop 35 percent this year but still paid president and CEO Eugene K. Cashman Jr. more than $326,000 and his executive administrative assistant almost $95,000.

Cashman also received health, life and disability benefits and money toward a retirement plan totaling $52,000. Assistant Sallie Foster received more than $22,000 in similar benefits.

The compensation is well over regional standards. Two watchdog groups also criticized the institute for spending relatively little of the $154 million it has in the bank and in investments on programs to help children.

The institute gave nearly $7 million in grants to local organizations last fiscal year and made almost $17 million in revenue and net unrealized gains on investments.

"They're sitting on this money, which allows them to do all these things," said Paul Clolery, vice president and editorial director of The NonProfit Times, a trade publication. "Is it the case that there are no urban children in need?"

Leaders of the institute say the salaries reflect the employees' long experience and the unique nature of the institute, which was created to advocate for children in issues such as teen violence and pregnancy, substance abuse and child abuse.

They also say that by limiting institute spending on programs, they have kept the institute viable in tough economic times.

The criticism of The Urban Child Institute comes amid increased government and public pressure on nonprofit organizations to prove they deserve tax breaks. For instance, the Internal Revenue Service is introducing new nonprofit tax forms requiring groups to give greater justification of their tax-exempt status and disclose more details about how the organizations are run and the charitable acts they do.

One well-known program at The Urban Child Institute is the annual publication commonly known as the Data Book. "The State of Children in Memphis and Shelby County" is a compilation of the institute's research combined with that of the University of Memphis, the University of Tennessee Health Science Center and others.

Cashman, 59, said he never imagined having to defend his salary.

"It's something I think satisfies all those tests: Nobody did anything illegally or immorally or any other way," he said.

The executives at four of the largest nonprofit groups in Memphis all are paid less than Cashman.

Last year, United Way of Greater Memphis president Harry Shaw received $240,901; Susan Sanford, president and CEO of the Memphis Food Bank, was paid $125,342; and MIFA executive Margaret Craddock was paid $114,959.

Robert Fockler, president of the largest nonprofit in Memphis -- the Community Foundation of Greater Memphis -- was paid $180,000, while the foundation's secretary, Patti Smith, was paid $103,300.

The median compensation for presidents and CEOs of nonprofit groups in the region is $112,000, Clolery said.

The average salary for executive administrative assistants at private and nonprofit organizations in Memphis is $37,000, according to the U.S. Bureau of Labor Statistics.

Cashman came to Memphis in 1977 to serve as administrator of the Le Bonheur Children's Medical Center. Le Bonheur Health Systems was created in 1983 to manage several health-related organizations, including the medical center.

In 1995, LHS merged the center into Methodist Hospital Systems and began selling off its subsidiary organizations and investing the money from the sales into stocks and bonds.

LHS became The Urban Child Institute in 2004, with Cashman as its president and CEO.

Cyril Chang, chairman of the institute's board of directors, said the board will review compensation in an annual review, using Chicago-based national consulting agency Mercer.

"When the review comes up, we'll look at compensation and engage an outside firm to give us their opinion on this," said Chang, who is also a U of M professor in economics.

Chang said the board will also examine criticisms of the institute's assets-to-spending ratio.

The Urban Child Institute would have received an automatic failing grade for keeping more than $140 million in reserve over the last five years had it been graded by The American Institute of Philanthropy, a national nonprofit watchdog group.

"I have a problem with groups that are holding such massive amounts of money in reserve," said Daniel Borochoff, president and founder of the watchdog group. "The organizations could be using the money to help others."

But Cashman said the watchdog group hadn't taken into account the long-term commitments of The Urban Child Institute.

"Those ratios and those tests are in part flawed unless you have the complete picture" Cashman said.

With the economy struggling, Chang said, the institute will likely not increase its spending on programs.

"I think we should be prudent on the spending side," Chang said. "If we're not careful, then we're not being good stewards of our money."


-- Ryan Poe: 901-529-2623

© 2009 Scripps Newspaper Group

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