What kind of non-profit pays its CEO $44 Million a year?

[Scuba]

Oh, that kind. They really, really need to lose their tax-exempt status.

http://sports.yahoo.com/blogs/nfl-shutdown-corner/roger-goodell-made-more-44-million-last-wait-211537621--nfl.html

Sports Business Journal had the story on Goodell's haul. He made a $3.5 million salary and a $40.36 million bonus (!). Of that bonus, $5 million was earned the previous year. The league told SBJ that $9.1 million of that pay came from a deferred bonus and pension from the 2011 lockout period, and his "true pay" is only about $35 million. Again, Aaron Rodgers is the richest player ever at $22 million per year.

Goodell makes far more than any other commissioner, SBJ says. MLB commissioner Bud Selig's salary is unknown, but reports have it between $22 million to beyond $30 million.

Deadspin pointed out that Goodell's salary is increasing dramatically, from $11.6 million in the period ending in March of 2011, to $29.5 million the year after that to north of $44 million last year. And the NFL players had to get locked out and take a league-friendly deal just to get back to work in 2011.

[sabbat hunter]

1. The NFL

is not a not for profit organization. It is clearly a for profit organization.. Teams pay taxes.


They are however anti-trust exempt which is entirely different.

[Scuba]

2. Sorry, fail ...

http://www.forbes.com/sites/tomwatson/2014/01/30/the-real-super-bowl-question-should-the-nfl-be-a-nonprofit/

The National Football League takes in more than $9.5 billion per year and is exempt from Federal taxes. As a nonprofit, it earns more than the Y, the Red Cross, Goodwill, the Salvation Army or Catholic Charities – yet it stands as one of the greatest profit-generating commercial advertising, entertainment and media enterprises ever created.

http://en.wikipedia.org/wiki/National_Football_League

At the corporate level, the NFL is a nonprofit 501(c)(6) association.

[Sgent]

30. That Forbes article is piss poor

reporting or reporting with a bias.

The NFL took in about $270 million for the last year available, with dues from the NFL teams making up about 250 million. It has a negative net worth, and if it was not eligible for 501c6 status would probably be an LLC -- which would mean the overall tax bill of all NFL related enterprises would go DOWN.

Forbes runs a lot of semi-op eds which have varying degrees of research. Look at the facts and detail: http://www.forbes.com/sites/peterjreilly/2013/06/01/nfl-as-tax-exempt-less-than-meets-the-eye/

[Scuba]

32. To me it's pretty simple: If you can afford to pay your CEO $44M, you can afford to pay taxes ...

... especially when your entire reason for existing is to avoid paying taxes and to weasel out of anti-trust laws.

What am I missing?

[Igel]

17. It's a non-profit.

The difficulty a lot of people have is distinguishing between the non-profit NFL and all the other things that carry the acronym "NFL."

The non-profit has no players.

The non-profit has no licensing deals.

The non-profit doesn't negotiate for broadcast rights.

The non-profit does have corporate members, and handles collective decisions and assumes collective responsibility. It collects fees and distributes them to its members as the members decide. It accepts monies from the for-profit arm and distributes them, after expenses, to the members.

The members are for-profit corporations, many of which get sweet deals at the public trough, but they're still for-profit. Some of the non-profit's decisions are encumbent upon the members to execute, because that's the requirement to stay a member, and the media acts like its the non-profit that's executing the decision. This is sloppy, but American's don't like worrying about details when they want to get to a quick, crude understanding and opinion.

The licensing and ventures arm of the NFL is a for-profit corporation and pays taxes on any profits it has after expenses and contributions.

One reason for the Commissioner's high compensation is that one of the VPs (Grubman) is president of the NFL Ventures arm. That has a high revenue stream and is for profit. This makes the NFL Commission officially out of the loop as regards the for-profit, but de facto that CEO's direct boss. (Goodell was head of Ventures before he became commissioner.) Another is that it's not a charitable, good-works non-profit. It's there for a business activity, which is to advance major-league football. There are a lot of such groups out and about.

Yes, it's legal to have the non-profit and for-profit organizations cheek-and-jowl like that. It's a fine line, but there are a lot of fine lines that Congress has set up and most people rather like having around. Most non-profits that get even middling-large have for-profit activities. Those are taxable and the books have to be kept auditable in case the IRS wants to make sure that they're paying taxes on what's taxable and keeping all the non-tax monies clean.

The Associated Students of UCLA is like that, in some ways. It's an unincorporated non-profit last I checked, founded in 1919 and which never incorporated as the IRS and Congress set up more rigorous and formal non-profit categories. It's the student store and on-campus restaurants/coffee houses. It's the (text)bookstore as well as the trade book section in the student store. It has a tolerable mail-order business. It's student media and the two student governments. It sort of owns two buildings (it was a point of open contention as to whether the UC Regents own ASUCLA or not, with both sides staking out their own legal claims and neither side pressing the point to find a resolution to the debate). It has net revenues in the millions of dollars--$81 million or thereabouts in '97, IIRC, and it paid taxes on a reasonable share of that. It paid no taxes on non-profit business revenues. It administers student fees and even had its on ASUCLA fee for a while (perhaps still does). It didn't bother to divorce the for-profit and non-profit managerial positions and have a CEO for the for-profit and a "director" for the non-profit.

[X_Digger]

3. "Non-profit" is really a misnomer.

All it really means is that profits don't accrue to shareholders. A better term would be a non-stock corporation.

A non-stock corporation can make gobs of profit, and pay it's executives however much it wants.

Even non-stock corporations that are tax exempt can make profits and pay their executives as much as they wish (only adhering to their internal bylaws or articles of incorporation.)

[Scuba]

4. See post #2.

[X_Digger]

5. And...? n/t

[BlueStreak]

8. Why don't we just call them what they are? Non-Taxed

Many of them are just money laundering operations to bilk people out of donations under the false pretense of charity and to send that money to the insiders by way of exorbitant salaries. Really, what it the difference between Komen and Joel Osteen? They both can point to so good things they ostensibly do. But mostly both operations are scams.

As a board member of two small charities that pay NO executive salaries, these non-profit fraudsters give us all a bad name.

[X_Digger]

9. Only a small portion of non-profits are also tax exempt.

And only an even smaller portion of those (tax exempt) are also charities.

That seems to be where some of the confusion lays. People seem to want to conflate "non-profit" with "charity".

Even charities can make money, and can pay their executives what they wish.

http://money.cnn.com/2013/10/10/news/nonprofit-ceo-pay/

In its analysis of 3,929 charities, the charity research group found that 11 nonprofits paid their CEOs more than $1 million in annual salary and bonuses in 2011. CEOs at 78 of the charities were paid between $500,000 and $1 million.

The CEO of the Boys and Girls Club of America earned the highest pay in the group of $1.85 million, according to the survey. The Metropolitan Museum of Art CEO earned nearly $1.5 million, the National Center for Missing & Exploited Children paid its CEO nearly $1.2 million, while the National Jewish Health's head got over $1 million.

[BlueStreak]

12. Under the accounting rules for non-profits you don't have to claim any taxable income

There is this line item called "excess revenues", which to the rest of the world means net profit. There might be a few non-profits that pay a little in income taxes, but that is not normally the case. Of course, they would be subject to property taxes and other fees, but most of them are able to elude income taxes. And if you have way too much profit left over, you can always pay a few million more bucks to your executives, thereby avoiding taxation.

That's what they do. Not all of them, but the crooked ones definitely do this -- and "crooked" is at least 15-25% of them, I'm guessing.

[Adrahil]

21. You're misunderstanding, I think.

Non-profits can and do earn excess revenues. What they can NOT do is distribute revenues as dividends to owners. They can, and sometimes do, pay top execs high wages as a means of funneling "profits," and that's technically legal, though there are supposed to be guidelines for that sort of thing.

I am on the board of a local non-profit. It is not a charity in the traditional sense. It is a ballet studio committed to making ballet available to kids of all economic backgrounds. Kids of well to do families pay a substantial (but not high) tuition, and kids from poor families pay less, or even no tuition. The studio typically operates on a break even basis. Sometimes it makes a bit more, some times less. When it makes a bit more, the funds are help in a surplus fund which can be used to cover years when we don't break even. One very good year, we made enough that some of the surplus was transferred to a capital fund that was attempt to establish an endowment. Sadly, that fund needed to be tapped almost immediately when we forced to move the studio.

[BlueStreak]

31. You describe how it SHOULD be, not how it is

Look at Goodwill industries, for example.

[DireStrike]

13. You are talking about existing law

which obviously doesn't match up with peoples' expectations of it, and THAT is what the OP is talking about.

The question is, WHY do these types of organizations exist?

[X_Digger]

14. I'm talking about popular perception versus reality.

The HOA in the neighborhood up the street is a non-profit. So is the cemetery, and the local rotary club. Some pay taxes, some don't. Some pay their executives, some don't. None are charities.

I wish more people understood that non-profit doesn't mean that a company can't make profit, or can't pay their executives (sometimes exorbitant amounts, even charities.)

[DireStrike]

28. Why do we have entities called "non-profit" that can make profit?

It's a weird bait-and-switch that the business community has used as a sort of PR maneuver (and sometimes tax shelter), like all the ephemeral rules governing "organic" products.

These other types of organizations should be called something else. I think in order for an organization to have the label of "non-profit", they shouldn't be able to make any profit. Personally I'm also in favor of putting guidelines on how much they can pay their top executives.

I'm not really interested in discussing how the existing law functions, since it is ridiculous and should be changed.

[X_Digger]

33. Profits don't accrue to shareholders. That's all 'non-profit' means.

Call them non-stock corporations.

Every company makes profit, or it fails. Even charities, a subset of a subset of non-stock corporations. Charity profits are invested into trusts, endowments, scholarships, grants, etc.

You're arguing that because things don't work the way you think they do, that reality should change to meet your perception, rather than just educating yourself?!?

[DireStrike]

34. I'm arguing that the term "non-profit" is deceptive and shouldn't be used unless there's no profit.

Legal definitions of words should strive to stay close to their everyday meaning. The further away they get, the more jumbled legalese nonsense causes confusion like that occurring in this thread. It's a poor practice. If what you're asserting is the legal definition of "profit", that is silly and should also be changed.

This is not about "reality" changing. Laws and legal definitions are not "real", concrete things, and if they are misleading they can and should be changed.

But it seems we are arguing past each other here. If you don't see my point by now I won't press it any further.

[X_Digger]

35. That's like arguing that since a hamburger isn't made of ham, they should change the name.

No, the name isn't going to change because you just found out that non-profit (non-stock) corporations, and even charities, can (and almost always do) make.. *gasp* profit!

[homegirl]

18. Read all about it!

Suggested reading on this topic:

Free Ride The Tax Exempt Economy
by
Gilbert M. Gaul and Neill A. Bordowski

A Universal Press Syndicate Company

Out of print but available used on Amazon for under $2.00.

[BlueStreak]

19. Only suckers pay taxes.

[Whisp]

26. +++

we should all be wary when 'non-profit' is used. It's initial feeling is something charitable with good works is being done - but we all know that's not true, too often.

[Fumesucker]

6. A remarkably profitable one n/t

[pipoman]

7. Additionally, most franchises are exempt

From property taxes and receive public money for their venues.

[Fred Sanders]

10. The American two party duocracy is the main problem, the massive corruption of the political

process that permits the rich and corrupt to write laws legalizing bribery and graft and get favorable tax treatment is the result, it is so obvious it hurts.

[zeemike]

16. As Leona Hensley famously said.

Only the little people pay taxes...and she knew it way back then.

[Tom Ripley]

24. +1000

[aggiesal]

11. I'm not siding with the NFL . . .

for multiple reasons but,

http://profootballtalk.nbcsports.com/2014/02/14/nfl-explains-that-it-does-indeed-pay-taxes/

[Scuba]

15. “The confusion arises from the fact that there is one small part of the NFL unrelated to ..."

“The confusion arises from the fact that there is one small part of the NFL unrelated to all this business activity, that is tax-exempt: The N.F.L. league office.”

A League Office that has enough income to pay its CEO $44 Million.

The arguement that the NFL is using to claim it pays taxes is like claiming the federal government pays taxes because government employees and contractors pay taxes. Hilarious.

[Adrahil]

22. I often disagree with you... But not this time.

This is also similar to the argument that capital gains shouldn't be taxed since the corporation already pays taxes... Yeah...... NO.

[whopis01]

23. I don't think the NFL should be classified as a non-profit, however it wouldn't change the taxes

paid by the organization.

If a for-profit organization does not make a profit (perhaps by paying all of its excess income out in salaries) it will not pay taxes. Now if they pay that money out to the shareholders as a dividend, they will pay taxes on it prior to paying it out. A non-profit can't have shareholders or pay dividends, so that wouldn't be an option anyway.

[Divernan]

20. "Charitable"medical group w/$10 billion in assets pays 0 property taxes:CEO gets $6Million

Once upon a time, the University of Pittsburgh Medical School set up the UPMC, i.e,. Univ. of Pittsburgh Medical Center. It has expanded from the university campus to swallow up most of the regional hospitals in the western half of Pennsylvania, and then into an international medical conglomerate, still based in Pittsburgh. It pays 26 of its employees over $One Million per year, and pays its CEO over $Six Million per year.

According to its "global strategic business initiative" office, it has opened clinics/facilities in the following countries: Ireland, Italy, UK, Kazakhastan, Singapore, China, Japan & Saudi Arabia. Yet it pays no property or wage tax to the City of Pittsburgh, claiming charitable exemption. And those overseas facilities are not in the slums or boondocks, but in areas of wealth - like Jeddah, Saudi Arabia - or where Big Oil is running massive operations with pipelines between Kazakhstan and China.

Total operating revenue $10 Billion in fiscal year 2013
Total Assets $9.9 Billion in fiscal year 2013
More than 62,000 employees

Where does the charitable part come in? UPMC claims "$268 million in charity care and unreimbursed amounts from programs for the poor". That description conveniently includes all the debts UPMC was forced to write off from the patients it drove into bankruptcy - you know - all those uninsured folks to which UPMC refused to extend the automatic discounts it negotiates with big health insurers.

The City of Pittsburgh has been battling in the courts for 2 years to get UPMC to pay property and payroll taxes. So far, no success.

[dembotoz]

25. this discussion bothers me to the extent that a non profit should pay poorly

years ago i worked for a community action program that seemed to wear the badge of bad pay as a badge on honor

yes 44 mil is too much

but employees working full time being eligible for food stamps is nothing to be proud of either.

[DireStrike]

29. And you'll probably find both in the same organization. -nt-

[Holly_Hobby]

27. I sat on the board of a non-profit for over 10 years

You wouldn't believe the perks that came with that job...and I was the lowly Admin/Sec'y/Treasurer, not even close to the top of the board.

Meals at 5 star restaurants, travel expenses, fancy hotel expenses, office and phone expenses, clothing allowance and a very nice salary.

I was always told to spend, spend and spend some more, because the IRS looks at non-profits who don't spend.