"They're making a million on us," a District homeless man was recently overheard commenting on the directors of non-profit organizations.

But after a close evaluation of the data, millions is hardly the case.

Most all of the heads of the 62 DC-based homeless service providers surveyed, particularly those of the smaller nonprofits, are underpaid and many of them are nearing poverty levels themselves.

The average CEO salary for local homeless service providers in 2004 was $76,408, according to analysis of the most recently available data. This is 45% lower than the average for all nonprofits in Washington, D.C., and nationally it’s 7.6% lower than the average for nonprofits serving the homeless, according to CharityNavigator.org, an online service that rates 501(c)3 organizations throughout the country.

When you break down the numbers even further into budget sizes, the smaller nonprofit executives in Washington D.C. are losing out even more when it comes to compensation. The average for the 27 nonprofits that serve the homeless with budgets between $500,000 and $3.5 million was $60,531, compared to the average of its peers throughout the country of $69,207, according to CharityNavigator.org, which does not look at nonprofits below $500,000. And for all nonprofits in Washington, D.C. in this budget range, the average was $116,154.

To be sure, the local midsize homeless service providers are faring better than those in other parts of the country. The local average for nonprofits between $3.5 million and $13.5 million was $109,484 and the median was $95,385. Nationally for homeless service providers these figures were $97,707 and $91,337, respectively. Still the average for all nonprofits in this budget range is $169,702.

These low executive salaries come despite the fact that the Washington, D.C. metropolitan region ranks fourth when it comes to income per capita for all workers with $46,782, according to the Bureau of Labor Statistics and that “very low-income” for the D.C. area is defined at $54,000 by the District’s Comprehensive Housing Taskforce.

So why are nonprofits serving the homeless getting so shortchanged when it comes to their national peers and other local nonprofits?

Sandra Miniutti, director of external relations for CharityNavigator.org, said that it’s a mix of image, donors and the long history of those serving the poor also living among the poor.

“I think there is a different perception for that kind of organization in the market place,” she said. “When a board has to set pay for an executive, they have to look at peers. And if everyone else in the market place is willing to pay a homeless [organization’s] CEO less, then it’s hard to raise that bar.”

Minutti added that “the base of donors that are giving to the arts and educational institutions are often bigger donors and unfortunately charities that provide services to the less fortunate are often forgotten by large donors.”

When comparing homeless service providers in D.C. to other parts of the country, it comes down to the large pool of candidates in the nation’s capital.

Daniel Borochoff, president and founder of the American Institute of Philanthropy, said that in evaluating appropriate salary level a board has to ask itself the question, ‘Can we find someone comparable if we paid less?’ And in D.C. unlike in many other parts of the country, this answer is more often than not ‘yes’ as the city attracts thousands of qualified candidates looking to make a difference.

Brian Carome, the executive director of the Project Northstar (The Homeless Children Tutorial Project), has worked at homeless service providers in Washington for the last two decades and has also seen this trend. “This sector of the nonprofit world continues to attract committed and idealist individuals who are willing to put the needs of others far ahead of their own career advancement,” he said.

Though Carome, who is also an active member of the Coalition of Housing and Homeless Organizations, added that this idealism should not be taken advantage of. He said that better compensation and more competitive wages would encourage executives to stay around longer and would also limit burn-out.

In his book “Begging for Change,” Robert Egger, the CEO of D.C. Central Kitchen promoted the idea that nonprofits should be structured more like corporations, including paying executives more competitively.

"Inside the sector, the vast majority of leaders are under-compensated, and the growing assumption is that we'll need to up salary levels to attract and retain talented executives,” he said. “But the public thinks ‘administrative overhead’ is a bad thing, leaving us stuck in the middle."

In the meantime, many executives are still working for a stipend, or as part of their religious commitment, or in exchange for living arrangements. And most heads of homeless service providers are working 50- and 60- hour weeks. In its March 2006 issue, The Chronicle of Philanthropy reported a survey revealing "three-quarters of charity CEOs are so fed up with their jobs that they plan to quit within the next five years" and pointed to low salaries as a strong factor fueling their discontent.

Moreover, few of these homeless service providers offer health insurance or retirement benefits, which contribute further to CEO burn-out. In DC, about half of the 62 nonprofits surveyed do not pay their directors any benefits; and even fewer low-budget nonprofits include benefits.

(All of the salaries came from 990 tax forms, which all 501(c)3 organizations have to file with the IRS, that are posted on www.guidestar.org. The local organizations analyzed were all those D.C.-based nonprofits that mentioned serving the homeless on their IRS 990 form or website.)

Still, some clients question the worth and financial compensation of executives providing them with basic human services, like shelters, meals, food distribution, literacy education, job training, housing and counseling, especially when some CEOs are making around $200,000. On any giving day you can hear homeless people at soup kitchens and in front of shelters talking about how organizations are “pimping the homeless” or “getting rich on the poor.”

Nevertheless, while executives are necessary to oversee the organization the most important employees to most homeless people are the frontline case workers and managers that interact with clients day to day, according to Cheryl Barnes, who recently worked her way out of homelessness and has been on the board of the Washington Legal Clinic for the Homeless for the last nine years. She said that these men and women are not paid enough and “first-line workers also need a cost-of-living increase each year.”

And Carome, with Project Northstar, agreed. “I think a more important issue is the poor pay for our front line staff,” Carome said. “If resources can be found to provide more competitive and fair wages, in most instances, I would like to see that allocated to these front line employees first.”

This is the first in a series of articles that will review and examine various local nonprofits that offer any services to the homeless. Later articles will evaluate the NPOs’ services, their overall budgets and their fundraising efficiency.

Laura Thompson Osuri contributed to this story.

Question of the Month

How do you chose which non-profit you make donations to each year, usually in December? Many have a favorite cause which has gotten its message of good works out to the public. Some pick charities based on some personal connection -- a parent who died from Alzheimer’s, a friend’s breast cancer or an office-mate’s heart disease. Still others choose to contribute to a non-profit organization because a friend asked them. Maybe you feel loyal to a particular institution, like your college.

Street Sense would like to know how and why you pick the Non-profits you donate to. How do you judge a charity’s effectiveness? Do you check out the charity’s financial records? Do its brochures impress you or does it take a personal contact to persuade you?

Let us know what you think by going to www.streetsense.org and clicking on the “Question of the Month” link.