I think most people would emphatically give the answer “No!” What about the executives of nonprofits who receive government funding? That question generally gets a “Yes!” by the public, especially in these financially difficult times.

Governor Chris Christie of NJ is proposing to limit the compensation of nonprofit executives whose organizations receive state funding. According to this Star Ledger article he wants to cap the pay of nonprofit executives at $141,000 for those with budgets more than $20 million.

This doesn’t make sense to me. In the private sector world, we purchase a product that we believe has a good value. If the CEO is making $3 million a year, that is built into the price of the product and we decide whether it is a good value or not. Why would that not be true of the nonprofit sector?

If Governor Christie feels like he is not getting his money’s worth, then go to a new nonprofit. Can’t competition take care of this problem? And if an organization is doing great work and the CEO happens to be compensated at $300,000 does that matter? Shouldn’t the outcomes, the impact, the results dictate whether you hire an organization to perform a service?

I obviously understand the many difficulties of this in the nonprofit sector but I believe mandating compensation limits is a dangerous road to go down.

Read a post by SSIR on the matter here and a previous post on the topic here.