The Green Bay Press-Gazette recently reported that for several years the Wisconsin anti-poverty nonprofit, Newcap, paid its CEO a bonus equal to “1% of all new money” brought into the organization. This arrangement, which was documented in the charity’s board meeting minutes according to the Press-Gazette, has raised ethical concerns among nonprofit experts.
CharityWatch CEO & Executive Director, Laurie Styron, warned that tying executive compensation directly to revenue generation creates serious governance concerns.
“This kind of arrangement creates an inherent conflict of interest,” Styron told the Press-Gazette.
Under this compensation structure, the CEO, Cheryl Detrick, received a $50,000 one-time bonus tied to a $5 million Bezos Day One Fund grant intended to support homeless families, according to the Press-Gazette.
CharityWatch’s analysis of Newcap’s 2022 tax filing determined that Detrick’s total compensation that year amounted to $324,150, which included $246,800 in base compensation, the $50,000 bonus, plus smaller amounts of nontaxable benefits and retirement and other deferred compensation. The Press-Gazette reported that the $296,500 in base compensation plus bonus was “the highest of any [CEO] at the 18 agencies making up the Wisconsin anti-poverty coalition WISCAP in 2022.”
When speaking with reporter Jesse Lin of the Press-Gazette, Styron explained that nonprofit executive compensation is not intended to be structured like for-profit incentive pay.
Nonprofit executive pay “was not supposed to be based on a profit motive,” she said, noting that compensation should reflect “education, skills and experience to do a job efficiently,” not how much money an executive can bring in.
Although such arrangements are not unprecedented, Styron emphasized that they are generally discouraged in the nonprofit sector.
“While this kind of arrangement is not unheard of, these types of compensation structures are typically frowned upon for nonprofit organizations,” she said.
Styron stressed that if a nonprofit chooses to maintain a revenue-based incentive system, donors should be informed.
Ethically, donors “should be made aware the organization has a compensation system that incentivizes fundraising, an incentive that may pull attention away from the organization’s other activities to its detriment,” Styron said.
From a watchdog perspective, transparency about incentive compensation is critical because it affects organizational priorities. When executive bonuses are directly linked to dollars raised, it can shift the executive’s focus away from program delivery, financial sustainability, or mission impact in favor of fundraising activities that will result in more pay for the executives.
Nonprofit leaders should be fairly paid, but because how they are paid can shape priorities, governance culture, and public trust, the structure of executive compensation matters. When incentive models tie compensation directly to revenue generation, donors deserve transparency and thoughtful oversight to ensure that mission delivery remains paramount. We encourage readers to read the original article in the Green Bay Press-Gazette for the full story.
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