By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
In 2002, Brown resigned as president of the University of Northern Colorado to take the helm at the Daniels Fund. He soon initiated an evaluation of the fund's staffing, which eventually led to the recommendation to purge one-third of its employees.
Most of the boardmembers, also former friends of Daniels, approved the layoffs and closures. The exceptions were Diane Daniels Denish, Daniels's niece and New Mexico's lieutenant governor; and Phil Hogue, the fund's former CEO, whom Daniels personally chose and who opened the out-of-state offices before stepping down in 2002 to battle a life-threatening illness.
Further fueling anger among former employees were management salaries. Brown's compensation went from $370,000 to $400,000, and members of the board -- most of them wealthy businessmen -- kept their entitlement of $20,000 for attending all four quarterly board meetings plus $2,000 for each committee meeting they attend. A member of the board could collect more than $50,000 per year just for attending meetings -- significantly more than the $37,166 the average Colorado employee makes per year for full-time work. "Bill specifically mandated in the articles and bylaws what the compensation would be for boardmembers," Brown says. "It's comparable to other foundations this size."
Still, says Cohen, "If the Daniels Fund had decided not to pay trustee fees or cut Hank Brown's salary, they could have kept a lot of the people they laid off."
Paying foundation boardmembers is not unheard of, although almost all non-profit groups that are funded by foundations expect their boardmembers to serve for free. In Colorado, the El Pomar Foundation, the Colorado Trust and the Henry P. and Susan C. Crowell Trust offer their trustees at least $20,000 per year. However, several of the best-known foundations, including the Boettcher Foundation, the Anschutz Family Foundation, the Gates Foundation, and the Adolph Coors Foundation, do not pay trustee fees. And El Pomar's boardmembers recently gave themselves pay cuts because the foundation's endowment had shrunk due to losses in the stock market.
"There are very few nonprofits that will pay salaries to boardmembers," says Steve Graham, executive director of the Community Resource Center, which offers training to nonprofits in Colorado. "In the nonprofit world, it's considered a service to the community to serve on a board. But the kinds of folks who serve on foundation boards value their work based on what they're paid."
As the head of the largest foundation in Colorado, Brown is also by far the highest paid. The leaders of the three other top foundations -- all of them with hundreds of millions in assets -- make much less, according to the most recent Internal Revenue Service filings. William Hybl, who heads up the El Pomar Foundation in Colorado Springs, makes $277,455; Colorado Trust's John Moran is paid $235,000; and Timothy Schultz of the Boettcher Foundation makes $195,860.
According to the Chronicle of Philanthropy, the median salary for a private-foundation CEO last year was $402,821, while the heads of charities averaged $282,712. The Chronicle found that, much like the salary of their corporate CEO counterparts, the pay of many charity leaders more than doubled between 1997 and 2002, with more than four dozen non-profit executives bagging pay hikes of more than 50 percent.
"Our philosophy is to pay people what people at similar-sized foundations get paid," Brown says.
But Pablo Eisenberg, senior fellow at the Center for Public and Nonprofit Leadership at Georgetown University, disagrees, because, he believes, giving money away is far less stressful than heading up a company under constant pressure to turn a profit. "You don't need to pay those kinds of salaries to get good people. It's an outrageous differential in pay," he says. "These are simple lives compared to folks who work eighty hours a week running complex organizations."
"Nobody should become wealthy working in the non-profit world," agrees Graham. "Hank Brown's salary is higher than any other foundation CEO in Colorado. No one else makes anywhere near what he makes. When big corporations lay people off and raise their CEO's salary, we all shake our heads and say, 'What's going on? How are they managing that company?' There are issues of ethics and principles at the root of all this."
That questions have been raised about the ethics of the Daniels Foundation is highly ironic, considering Daniels's reputation as a man who emphasized ethics in his business dealings. In 1987, Daniels gave more than $10 million to the University of Denver to help fund the business-school building now bearing his name. He made one key demand: Every student would be required to take a business-ethics class.
In Stephen Singular's authoritative biography, Relentless: Bill Daniels and the Triumph of Cable TV, he recounts a visit Daniels made to a business class at Dartmouth College. When Daniels stepped to the podium, he carried a nicely wrapped gift under his arm. He proceeded to tell the class about business deals he had done, claiming they had all involved outrageous conflicts of interest.
Finally, one student in the back row had heard enough and challenged Daniels, asking him how he could possibly conduct business that way.
Daniels walked over to the kid and gave him the gift box, which held a pillow that read "Give me equity or give me death." Daniels then dramatically addressed the rest of the class: "What the hell is wrong with you people? There's only one person in a classroom of forty people that's ethical?"