THE VOICE OF CHICAGO'S GAY, LESBIAN, BI, TRANS AND QUEER COMMUNITY SINCE 1985

WCT raised the topic of his salary, which, ever since reported here and in The New York Times, has become a topic of conversation. It should be noted that the issue of his compensation is not occurring in a vacuum, as the nonprofit world struggles in a shaky economy and as several organizations across the country show signs of stress or are threatened with closure. The for-profit world has also seen some of this discussion, especially with regards to the banking institutions that have been at the heart of the recent financial crisis. However, the discussion there appears to not have had much cultural or political will, beyond the rhetoric of some politicians. Goldman Sachs recently announced that it was tripling the salary of CEO Lloyd Blankfein to $2 million in 2011, up from last year's $600,000 last year

To put matters in the context of the nonprofit world: the website Mainstreet.org recently listed the 15 most highly paid CEOs in the charity world based on the findings of Charity Navigator (CN), which describes itself as an "independent charity evaluator." The introduction to CN's 2010 report states that "[m]any donors assume that charity leaders work for free or minimal pay and are shocked to see that they earn six-figure salaries. But these well-meaning donors fail to consider that these CEOs are running multi-million dollar operations that endeavor to change the world."

According to Mainstreet.org, the 13th highest salary in 2008 was $861,625, and it went to Richard Moe of the National Trust for Historic Preservation. The amount was 1.46 percent of the group's expenses. (Mainstreet notes that this was "due to a one-time deferred compensation payout," CN lists the 2009 president's salary as $417,808, or 0.79 percent of expenses.) The highest in 2008 was that of Zarin Mehta, of the New York Philharmonic, who was compensated $2,649,540 in 2008, at 4 percent of total expenses. (CN lists his salary of 2009 as $1,000,778 or 1.50 percent of expenses.)

In a wider context: Illinois Gov. Pat Quinn's salary is $177, 000 and Mayor Richard Daley makes $216,210. However, both men also receive housing and transportation, and that includes plane travel. Arguably, both men are also in charge of the needs of larger populations and administrations.

Such reports provide objective criteria by which to judge the scale of a CEO's salary among comparable organizations. Nevertheless, the conversation about nonprofit compensations will continue as some organizations shut their doors while others, like HBHC, appeal to the community for sustaining funds. Edwards left a job as partner in the law firm Kirkland and Ellis to join HBHC. Over the coming months, WCT will be reporting on the financial details of other LGBT and AIDS organizations in the city.

Windy City Times: Karma Israelsen is the board chair. She's also from the corporation as Mark Andrews [the former board chair].

JE: They both worked in the same company, that's correct.

WCT: Was that a factor in how she was chosen to be on the board and then board chair?

JE: As far as I know, it was not a factor and I don't think it's relevant. They did work at the same company but they did not work in the same department and, quite frankly, Karma is a vice president and more senior than Mark and the board felt very comfortable there would be no undue influence or inappropriate relationship between the two, that they both served on the board or one served on the board, and I believe that completely. The board has a conflict-of-interest policy and it's fully disclosed that she worked for the same company.

WCT: Could you explain the plaque that was given to Mark Andrews and the board [at the event announcing that HBHC had met half its fundraising goal of $500,000]? Why was the board given a plaque of recognition?

JE: Because the board as the governing body of the agency, the board that helped see us through a substantial period of transition, deserved to be recognized for having done that. We recognized them for having done that. They also deserved to be recognized for having put the agency first and agreeing being agreeing to transition themselves out for the good of the people we serve.

WCT: Given that this is also the board that oversaw the loss of the MACS [Multicenter AIDS Cohort Study] grant, some people have been questioning that decision. This is also the board under which a substantial amount of money, $3 million in three years, was lost. Can you address that? How did that factor that into the decision to give them a plaque?

JE: Everybody makes mistakes. But that doesn't mean that you ignore the good things they did. [As for the transfer of the grant], none of us was thrilled about that but it seemed like the right thing to do and ensure that the work continued. Had that not happened, the grant would have been lost completely. So that decision was the right decision for the agency.

More importantly, it was the right decision for the people who depended on the research and the services of the grant, and the board made that decision. At the same time, the board also made the right decision to transition the organization to a new board. That was a very important big step. The board also supported my decision and worked really hard with me to lead this lifeline appeal and raise a substantial amount of money for the organization. And despite whatever mistakes they may have made over time, you still can't ignore the fact that they deserved to be recognized for the good decisions they made and that's what we did.

WCT: Have you and Mark Andrews been involved in any kind of romantic relationship?

JE: Absolutely not. I've been involved in no romantic relationships with anybody that has served on the board. And whoever will, currently or in the future.

WCT: Regarding the committee that has just been formed: Can you tell us about the history of how this came to be formed and the choice of Ron Nunziato as the committee chair?

JE: The board leadership and the board made the decision on the committee. Ron volunteered for this position. In fact he's the only person who volunteered for the position. The board did consider other people for the position but we felt very confident in his leadership. ... He has a history with the organization and he has a reputation for having the utmost integrity and also for being very efficient and very efficient. I've witnessed that firsthand, having served on a board with him in the past.

WCT: Did you and Karma have a say in how this committee was formed?

JE: Absolutely. Karma and I spent a great deal of time thinking this through. We had several expressions of interest from people. But we thought about the size of the committee, the great amount of work the committee has to do, with all these 30-40 applications pending, the timeline under which they have to do it. We identified the people who had expressed a very serious willingness to do this and a willingness to take all the time necessary to make that happen.

WCT: Out of these, all but one [Alicia Ozier] have had some kind of connection with HBHC.

JE: Leslie Ramyk is the executive director of a foundation [Ravenswood Health Care Foundation] that provides a relatively small but significant amount of money to HBHC, but that's the only connection.

WCT: But she does provide some amount of funding?

JE: Absolutely. And we are really grateful to the people who provide funding and continue to fight these challenges and have expressed a desire to support us, and she's one of them.

WCT: That's quite a number, five out of six [with prior connections]. Was there ever an attempt to say, "We should attempt to have at least half of the number of people who have had no connection to HBHC prior to this?"

JE: That doesn't make a lot of sense to me. We're not trying to change HBHC and basically throw out the baby with the bathwater. HBHC is an excellent organization and it has been for 37 years. We want to continue our focus, improve our focus and one of the ways to do that is by getting people who understand the mission, who are committed to the organization, who have stood by the organization.

People who have stood by the organization are the best people to lead it forward and everybody who is on that organization has stood by it in good times and bad times. And they understand the importance of the work, they understand the mission of the organization, they understand what's great about the organization and what's needed to improve that. To have outsiders who have not stepped up, who have no connection or understanding of the organization, and haven't been supportive lately, I don't think that's good for the organization.

WCT: What if you had people who were in the healthcare industry and who had an investment in that aspect of HBHC? Do you think they would not have cared at all about HBHC? Even if it was half and half, or something like that? Are you saying that someone, say, from a medical organization or a foundation that had no connection to HBHC would not have had any investment in the interests say, of patients?

JE: I'm not saying that at all, but let me say this: First of all, none of those people volunteered. The people on the committee offered to help. So if you ask me, did we go shake the tree and search for people to help us, despite our very public call for help, no we did not. But those who answered the call, those who are on the committee, have some relationship with HBHC or prior; that's not a bad thing. … These are all people who volunteered … who said, I want to help, let me know how I can help, I'm going to do whatever it is you need me to do to help. In fact, the people who're sitting on the committee have come into the organization over the last several months; they have helped promote the image of the organization … they deserve to be on that committee. And I don't have a doubt they will do what's best for HBHC.

WCT: The question of your salary has come up. Your salary is $265,000 [a year].

JE: That's exactly right.

WCT: Then the question does become if you have been part of a process that establishes a committee that then chooses a board that will also determine your salary. So, can you address the issue that might be raised with what might seem like either a conflict of interest or perhaps a way in which you are responsible for determining who will determine your salary?

JE: First of all, that is a very inappropriate insinuation. Every organization, the executive director or CEO plays a significant role in the growth and development of their board. There's not a single one in Chicago or this country where the primary head of the organization doesn't play a significant role in the development of the board of directors. The board is a partner with the CEO. They're not antagonists of each other, they have to work together to lead the organization. They play a role in my selection, they play a role in my compensation, they play a role in everything I do and I play a role in the things they do.

The question becomes whether or not the person has the character and the integrity who won't abuse that partnership, and I think I've shown that I'm that person. I have not abused my partnership with the board, I steer very clear of things that are inappropriate for me to be involved in. The fact that the board consults with me about who might be on the committee, to select the board that I have to work with to lead this agency through crisis, is not a conflict of interest.

WCT: Okay, but just to be clear, about what you referred to as an insinuation: You do understand that, given HBHC's recent history, why people are asking these questions, the necessity of these questions.

JE: I do, but I also want to know what that has to do with helping HBHC succeed. The fact that people in the past made mistakes and took advantage and did things that were not appropriate, doesn't mean I'm gong to do that. Since I've been there, I've provided more transparency with HBHC than has been provided; I have taken all of your calls; I've opened up the doors; I've worked really hard to turn this agency around; I've raised a substantial amount of money that almost all of the peer agencies in the country thought we wouldn't be able to do and we did it. We have started moving in the right direction. I don't think there's any reason for someone to think that I would abuse the trust that the people we serve have placed in me and in this organization.

I understand that you're asking the question, but I'm beyond the point of understanding it and I'm starting to wonder whether people want to support us moving forward or if they want to continue to dwell on the past.

WCT: Speaking of the past, can you speak to when we might get a full report on exactly what happened with the MACS grant and with $3 million gone over three years?

JE : We hired new auditors. They have been very thorough. It has taken a substantial amount of effort to collect everything they've asked us to provide but as soon as that audit report is issued, we'll be publishing a report that talks about the past, what we've done over the last six months. I can tell you right now we will soon be announcing the Lifetime Appeal that's raised over $750,000. We, as of 12/31, went from a three-to-four-year deficit to actually having a small surplus. Halfway through the end of our fiscal year, the organization is heading in the right direction, and as soon as I have the audit report for our fiscal year, 2010, we will be putting that information out to the public.

WCT: But you do understand that one reason that people are asking is because we are told that things that happened in the past won't happen again. But the issue is that we still are not clear on exactly what happened.

JE: What more did they want to know? The organization was mismanaged, grant funds were used inappropriately to cover operating costs that should have been covered by fundraising and by efficient management of the organization. We disclosed all of that, we disclosed we put in more internal controls, we focused on improving our efficiency, being very thoughtful about the bottom line of the organization. We put that all out there. The personnel issues and personnel matters: I don't know that we're ever going to share that. But we will be able to walk people through the last four years of performance of the organization and what's been happening since I've been there.

WCT: And in terms of prior personnel like Michael Cook and so on, do we know if they're likely to be subject to punitive measures, either by HBHC or by federal agencies?

JE: The federal agencies—that's something they have to decide, and I understand that's something they're looking into. The matter was referred to the office of the inspector general … whether or not any potential action would be taken against the organization, or any of the parties held responsible. We have not heard back from them … except that we know every federal agency that funded us in the past has been in touch with us, we've shared all this information with them and they continue to support us and fund us.

With respect to whether the organization is going to take any action against those people: That is a question for the new board of directors and that's one of the reasons why I think it's a good idea we have a new board coming in. They can make that decision. It's ultimately their decision, not mine. …

I want to resolve this question about my salary … I want to be really clear about something. I think people have made a big issue about my salary and it's completely inconsistent with what has been established as a baseline for fair executive compensation for an organization of this size. My salary was set before I even came. The CEO salary was set. First of all, nobody raised any issues about this when the organization wasn't performing well. Nobody said anything about this over the last three or four years [when we] suffered a deficit. But, nonetheless, the salary was set, based upon what people in this role get paid in similarly sized organizations.

Howard Brown is a $15 million organization; it has over 200 employees, and people that work at that size of an organization with that much responsibility get paid what I get paid. …

I could give you some examples, if you think of it as a function of expenses, which is the guide that Charity Navigator uses. Howard Brown, we're a $15 million organization: my salary represents less than 2 percent of the expenses [CN lists previous CEO Michael Cook's salary as $272,690, or 1.66 percent of expenses. According to the organization's 2009 Form 990, this included a bonus of $25,000.] Let's take some peers here in Chicago, Center on Halsted. I'm not going to point out people's salaries in particular but the CEO salary there is 3.14 percent of expenses. [CN lists Modest "Tico" Valle's salary as $141,960, or 3.14 percent of expenses.] Another organization that I think everyone thinks very highly of: Lambda Legal. It's important to note that Lambda Legal is an $11 or 12 million organization; Howard Brown is bigger: Their CEO makes almost $260,000, 2.44 percent of expenses. Let's take another one: Elton John's AIDS Foundation. A $6 million organization, the CEO makes $239,000, 3.29 percent of the expenses. I can go on and on. There are several of them out there, who are good organizations. GLAAD: $14 million organization; the CEO makes [$238,003], 2.72 percent of expenses. Locally, Chicago House: $3 million organization, the CEO makes $150,000. [According to its 2009 Form 990, CEO Stan Sloan's base compensation was $173,417.]

WCT: So, you're saying that, in relation to similar-sized organizations, your salary is not that disproportionate in relation to the expenses. Your salary is concomitant with what other people get in similar-sized organizations.

JE: It is, and it's important to note that in addition to just running the organization, I provide a substantial amount of the organization's legal services. … Between my old law firm and myself, Howard Brown does not pay for legal services and we have a fair amount more legal work than we ever had before. And at the same time, I have brought in more revenue to Howard Brown in six months. We just redid our pharmacy program which, thanks to a lot of our patients who had insurance and used our pharmacy services, will probably make us over $750,000 net in one year. I want to get to a place where people understand that for an organization to succeed, that means investing and getting the right talent and the right people to do the right work. It does not mean picking on them for making what they deserve to make.

WCT: One of the issues seems to be that, unlike, say the other organizations you named, HBHC is a service organization. The other issue that people are raising is a question of scale, between how much a CEO gets paid versus, say, what a case manager might get paid.

JE: That's not correct, either. First of all, we're the only LGBT health center in Chicago; we're also the only health center that's as diverse as Howard Brown is, in the whole city. We're not just healthcare, we're also a youth center, we're also a retail shop. Even if you took pure healthcare and compared it to other federally qualified health centers or community health centers, their CEOs all make comparable salaries, if you compare them to an organization of our size.

Take, for example, just the medical director. Our chief medical officer rightly earns about $160,000 a year, and that's because he or she is responsible for about $3 million worth of revenue in the organization that we generate through our medical practice on a fee-for-service basis. [This] actually includes mental health, which she doesn't technically oversee. Nonetheless, that's $160,000 for $3 million of the revenue. I'm responsible for five times that. Chicago House, a social-service agency which sees people for healthcare and housing, $3 million worth of revenue; I have five times that responsibility and I don't make five times any of my peers' salary.

If people want to be really serious, they need to think about that. Same thing with our case managers: Our case managers at Howard Brown are compensated comparably with their peers at other organizations. We strive to be at parity, if not a little bit ahead of that, and I've said publicly that one of my commitments to the organization making sure our talented staff is appropriately compensated, because when you work in the health industry in particular, you have to compete with hospitals, which can pay much more money. Those people deserve to be compensated, or we'll lose them.