Ethical Charity

[dieseltaylor]

This is an interesting one.

Should charities take advantage of tax havens to avoid tax? Is this a case of following best practice (the so-called 'tax efficiency' argument), or does it show a disconnect between what normal society would regard as ethically acceptable and current routine practices among some non-governmental organisations?

We ask these questions because U.S. Senator Charles E. Grassley has just tabled legislation to call a halt to federal funding to charities that use offshore structures to avoid tax. This proposal apparently arises from the senior Republican's investigations while on the Senate Finance Committee, during which he discovered that Boys and Girls Clubs held in excess of $50 million worth of equities and other assets in the Cayman, British Virgin Islands and Bermuda.

Boys and Girls Clubs are reported to have responded saying their actions are: “completely legal, routine, and widely implemented by large nonprofit organizations.”

My gut reaction is that charities should keep their money in the country where they raise it or where they spend it.

My second reaction is . WTF are they doing with $50 m anyway. I assume that a lot of money is onshore also.

For background and details of the club see Wiki.

http://en.wikipedia.org/wiki/Boys_%26_Girls_Clubs_of_America

In March 2010, four US Senators questioned the non-charitable spending and compensation practices of the BGCA, citing the charity CEO Roxanne Spillett's total 2008 compensation of nearly $1 million and $4.3 million in travel expenses incurred by the organization that year.[4

I have always had problems with the concept of highly paid charity bosses. There are enough retiring CEO's/ officers/ good intentioned smart folk to fill the charity CEO role at a fraction of that salary.

[Michael Emrys]

I have always had problems with the concept of highly paid charity bosses. There are enough retiring CEO's/ officers/ good intentioned smart folk to fill the charity CEO role at a fraction of that salary.

Yeah, that one really bugs me too and is a reason why I hesitate to donate to charities. Why is it that when they travel to conventions they insist in staying in luxury suites of the finest hotels? Would it kill them to stay in a cheap room in a motel? I thought the idea of giving money to charities is to help the needy, not the privileged. Just one more goddam scam...

Michael

[Stalins Organ]

I have no problem with paying CEO's of large charities competitive salaries - they are big businesses, handling 10's of millions of $$'s, and they need good people to run them.

And anyone who has ever done any significant amount of business travel knows that staying in crappy accomodation is just another stress you do not need.

All that said there needs to be at least as much accountability and justification of expenses as in any tightly run organisation - and probably more becaujse of the reputational risk that is involved - as this thread highlights.

[dieseltaylor]

The assumption that large salaries means an effective executive obviously is totally bogus. You may have noticed that the recent economic meltdown was handled by extremely well paid people.

Furthermore in most organisations the effective work is down by the level below the CEO.

Edit. SHe retires next year when she will be about 63. Her replacement will be another BGCA employee. Spillett worked for BCGA for 30 years so whether she would have cut it elsewhere is an unknown. I have a strong suspicion her salary is a reflecton on the amount on income generated from corporations etc. I understand that it is not uncommon for effective fundraisers to be well rewarded. And I think she has been fortunate in taking advantage of the boom years and the decline in schools to make some big increases in size and membership.

However does that mean she is worth $1M a year?

ANd should US charities hold money off-shore?

[Affentitten]

What's with taxing charities anyway? Don't they have not for profit status?

[dieseltaylor]

Yes it does. Lack of trust in US banks? Better interest rates? Easier to move money?

[Stalins Organ]

The assumption that large salaries means an effective executive obviously is totally bogus. You may have noticed that the recent economic meltdown was handled by extremely well paid people.

True - but it also not true to say that large salaries mean crap leadership - ther is no reason why large salaries HAVE to mean bad leadership, and I'd suggest that there are probably more places paying large slaries where the leadership is fine and dandy.

Please note that what I said was "competitive salaries" - if someone has come up through effectivemanagement and having a good track record of success, then would yuo not expect them to:

1/ be well paid, and

2/ continue to be successful?

However does that mean she is worth $1M a year?

These days that doesnt' seem like a particularly massive salary!! :/

However ultimately it is up to her board to decide.

You can possibly influence their decision by "public pressure" of course....

ANd should US charities hold money off-shore?

If there is an advantage to doing so, then why not?

[Michael Emrys]

These days that doesnt' seem like a particularly massive salary!!

It does to the folks who are trying to scrape by on $10,000/yr...or less.

Michael

[dieseltaylor]

$1m is a massive salary - look at the split below. And I would not mind betting that there are extras in there like healthcare, pension, and sundry costs. And if you were like Neutron Jack you arranged for lots of perks after you left the company.

As for off-shoring funds. Rather like off-shoring industry, service centres etc what is good for the "firm" is actually harmful to the country in terms of less jobs, less money being pushed into the economy.

That you read about $1M being bandied about it the media does not make it uncommon, rather like toddler noshing dogs, or lethal shark attacks. Lethal shark attacks 64ish a year out of 6 billion people. You might be forgiven for thinking it more.

BTW there is a hell of a difference in a salary of $1m given every year and people getting bonuses or winning it in one offs.

There is the point that being top of the heap is not actually a recommendation of being the best. The problem comes from hiring from a smaller and smaller pool of apparently eligible candidates. One only has to look at politicians and realise that when there is a very small pool of people to choose from crp will float to the top.

BGCA apparently recruits in firm, and it probably looks one/two level down from the top. Now in the wide world there may be a hundred thousand people who could do the job better than the new guy. However they have not worked in BGCA for decades and are therefore ineligible for the $1m job - according to the Board who make the choice.

I know of a guy who has been head-hunted in on a $1m+ salary to head his speciality at a company. However in his new role he is actually a manager and that does not interest him, in fact he is amazingly poor at it. He has 1500 staff and he does not wish to manage. Great choice. That actually happens a lot despite it being a well-known promotion error.

SUMMARY OF FEDERAL INDIVIDUAL INCOME TAX DATA, 2010

http://www.financialsamurai.com/2011/04/12/how-much-money-do-the-top-income-earners-make-percent/

Hell of a discussion there.

[Michael Emrys]

And let us not forget that large institutions of any sort tend to operate on the Peter Principle. If followed strictly, it would mean that all managerial positions within the organization would be staffed by incompetents. Fortunately, we live in an imperfect world, so that even if the organization does not will it so, occasionally a competent person is able to sneak in...at least until discovered.

Michael

[dieseltaylor]

From the NYT:

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

[Stalins Organ]

Right - so y'all are comparing a CEO of a multi-million dollar organisation with minimum wage workers - how is that a competitive situation?? Aer y'all amaking sure you work for peole who used to earn $10k pa before they were your CEO? Does it give good job security? Are those charities doing a great job??

Has anyone actually botherd to see whether she's doing a $1 million job or not?

Or is it jsut that she's the "tall poppy" - getting paid a very good salary - if not a massive one for a CEO of a large organisation - and so of course she can't be worth it??

the evidence being some other dude who got head hunted for $1 million and isn't worth it......

And now, for some reason.......Warren Buffett's well known diatribe about taxation is relevant to whether she's worth $1 million......how does that work???

[Sixxkiller]

I dont give to any charities anymore. I just have no idea who to trust. I particularly hate the ones who parade children around on the television, or ones that show animals in a sad light. I wonder if the millions they spend on the commercials could be put to better use.

[dieseltaylor]

Right - so y'all are comparing a CEO of a multi-million dollar organisation with minimum wage workers - how is that a competitive situation?? Aer y'all amaking sure you work for peole who used to earn $10k pa before they were your CEO? Does it give good job security? Are those charities doing a great job??

I am happy to admit that she may have done an excellent job. My problem is the spiralling of salaries as they are bench-marked by recruitmernt companies as to what is the right salary. You do raise a valid point. I do knoow of selection procedures where the qualifying includes something like the candidate should already be earning x - laughable really.

As for the CEO of a bank being paid a huge bonus to do what any good CEO should be doing that really gets my goat. Good customer service should be the aim of all businesses - well any that want to keep in business for the long-term.

I thought I would throw Buffett views in as that article is 15/8/11 and relates to wealth and an unfair society. Waren Buffett probably understands more than you SO on wealth and the US, so lets give him some respect. And if you think it right that 400 individuals have an income of $91billion a year feel free to justify them.

[dieseltaylor]

I dont give to any charities anymore. I just have no idea who to trust. I particularly hate the ones who parade children around on the television, or ones that show animals in a sad light. I wonder if the millions they spend on the commercials could be put to better use.

You and me both. A good reason to record all TV and FF through the adverts.

If I want a guilt trip I read the news but when at home I want to relax when I want to relax and fret when I choose to fret.

I do have one I really like Sightsavers. Best value and really important to the sufferers.

[dieseltaylor]

I think this shows the highest paid employees. The income is about £147 million.

There were 3 employees (2009: 1) whose emoluments were in the range £60,000 - £69,999.

There were 4 employees (2009: 2) whose emoluments were in the range £70,000 - £79,999.

There was 1 employee (2009: 0) whose emoluments were in the range £80,000 - £89,999.

There was 1 employee (2009: 1) whose emoluments were in the range £90,000 - £99,999

[ASL Veteran]

Ha ha ha ha ha ... thanks for the good laugh Diesel courtesy of Warren Buffet. You know what is really funny about Warren's little piece? He can already make direct contributions to the treasury department for the purposes of paying down the national debt - right here.

http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm

In fact, you might even be able to contribute as well Diesel, although I'm not sure - you may need to be a citizen of the US. Rather than writing Op Editorials in the New York Times begging to be taxed more why doesn't he just break out the check book and put his money where his mouth is? It's all about leading by example isn't it? He doesn't need an act of congress to pay more taxes. He can even use many tax maximizing strategies to increase the taxes he pays.

http://www.forbes.com/sites/dougbandow/2011/07/11/patriotic-taxation-or-unpatriotic-redistribution/

The unruly Democratic coalition can unite around little other than raising taxes. Only with higher revenues can the various interest groups carrying the Democratic banner enrich themselves at public expense.

Not surprisingly, few people who actually work and pay taxes are enthused about turning more of their money over to Washington. So big-spending pols have to resort to increasingly creative arguments for pushing up the government’s take.

The campaign to fill government coffers naturally has focused on the “rich.” (Luckily, I guess, I don’t qualify under anyone’s definition!) Senate Majority Leader Harry Reid is pushing a resolution declaring that “it is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.”

Offering more than boilerplate rhetoric is former Labor Secretary Robert Reich, who proposed returning to a top income tax rate of 70%. Still, he could have gone higher: the top rate once ran 91%, before President Jack Kennedy’s across-the-board rate cuts.

A more peculiar advocate for higher taxes is “Patriotic Millionaires for Fiscal Strength.” The group has a website and its members wrote an open leader urging the president and congressional leaders “to put our country ahead of politics.” How? By increasing taxes on incomes greater than a million dollars.

Argued PMFS, “Our country faces a choice—we can pay our debts and build for the future, or we can shirk our financial responsibilities and cripple our nation’s potential.” There’s no discussion of cutting spending, which has exploded in recent years. Rather, argue these “patriotic millionaires,” a decade ago Congress “made a mistake. You decided our country needed less money, and millionaires like me needed more.” The obvious answer: “Please do the right thing for our country. Raise our taxes.”

Actually, tax cuts don’t reduce money for “our country.” Tax cuts reduce money for the government. The two are not the same.

If there is one truth in life, it is that Washington spends far more money than it should. Indeed, Uncle Sam squanders money on a grand scale. There is the usual waste, fraud, and abuse. The redundant and ineffective programs. The pork used to reelect legislators. The consistent refusal of the governing establishment to treat the taxpayers’ money as anything other than a great common pool to use for political advantage.

The greatest waste of money is not inadvertent inefficiency, but intentional redistribution from the economically productive to the politically influential. Why billions in pork? Why tens of billions in corporate welfare? Why hundreds of billions in subsidies for rich foreign allies? Why more than a trillion in middle class welfare?

The deficit is too high because the government spends too much, not because Washington collects too little. In the decade following the Bush tax cuts federal revenue actually rose, just not as much as it would have otherwise. As a percentage of GDP federal tax revenues, despite the Bush tax cuts, continue to run around the historical average of 18%.

From 2001 to 2011 a projected surplus of $5.6 trillion turned into a real deficit of $6.1 trillion. Noted the Heritage Foundation’s Brian Riedl, the “tax cuts were responsible for just 14% of the swing.” A similar analysis by the Tax Foundation’s Scott Hodge figured that number at 16%.

The biggest factors by far were increased spending and lower economic growth. Today’s huge deficit is almost entirely due to them, as the impact of the Bush tax cuts continues to diminish. There are many people to blame for exploding deficits, but not because they reduced income tax rates.

The future is even clearer. Over the last 40 years revenues have averaged about 18% of GDP. The Congressional Budget Office projects that tax collections will run about 18.2% of GDP in 2020, even if the Bush tax cuts are preserved. In the past, outlays averaged 20.3% of GDP. The CBO expects that to go to 26.5% without action. Spending is the problem.

But the issue is not partisan. Republicans bear equal responsibility with Democrats — the Medicare drug benefit was a budget-buster just like health care “reform,” and the misguided Bush administration wars have turned into unfunded liabilities. However, the answer is not handing more of people’s earnings over to the same legislators who have so prodigiously wasted past monies.

The “patriotic millionaires” would do more good if they campaigned to stop legislators from gaily wasting taxpayers’ dollars day in and day out. Only politicians would benefit from a tax hike like that suggested by PMFS.

Still, if the “patriotic millionaires” really believe the government collects too little money, they should personally contribute more. The organization argues increasing taxes “is both an ethical and patriotic decision,” but there is nothing ethical or patriotic about taking other people’s money. Real fiscal patriots would give more of their own cash.

Earlier this year Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, wrote the PMFS coordinator to helpfully point out that “For those that are interested in making voluntary contributions to pay down the national debt, the process is both easy and advantageous.” Voluntary payments to reduce the debt came to only $3.1 million in 2010, leaving much room for the “patriotic millionaires” to help out.

The PMFS responded rather churlishly, denouncing the idea of allowing people to “opt out” and noting that the government even used rationing during World War II. But the biggest problem, argued PMFS, is that “we are a very small group. If there were even the remotest chance of making a noticeable dent in the problem by acting alone we would have done it already.” So it appears that there are virtually no “patriotic millionaires” ready to give politicians more money to waste. Rather, the PMFS apparently represents a few “unpatriotic redistributionists” who mostly want to take more of other people’s money.

In support of raising taxes the PMFS members contend that “We have been more fortunate than most people.” But they also likely pay more taxes than most people. In 2008, the last year for which the figures are available, the top 1% of earners paid 38% of total income tax levies; the top 5% paid 59%. The top quarter paid 86%.

These numbers generally have been increasing over time. They rose after the 1986 Reagan tax reform, which kicked many poorer people off the income tax rolls entirely. The shares of taxes paid by wealthier Americans also rose after the Bush tax cuts.

In contrast, the share of income taxes paid by the bottom 50% started out below 10% and fell steadily over time, to less than 3% in 2008. In fact, federal policy, particularly the earned income tax credit and child credit now mean that almost half of filers pay no income tax. Virtually no one in the bottom income quintile and only a minority in the next quintile owe anything.

Never mind, says PMFS. Member Paul Egerman argued that “If our country is really broke, then we can’t afford to give tax cuts to people like me.” However, tax cuts give nothing. Rather, they allow people of all income levels to keep more of their own money, money usually earned through hard work, risk-taking, investment acumen, and/or entrepreneurial insight.

Yet the worst blindness is the failure to address what additional revenues would be used to finance. To Sen. Hatch’s argument that the deficit reflects overspending, replied PMFS: “This is quibbling over semantics. Deficits result when spending exceeds receipts. Whether that happens because spending is too high or receipts are too low is a matter of perspective and priorities.”

It is a matter of perspective and priorities, which must be addressed. If the U.S. was locked in a struggle for national survival, then one might call on the American people for a maximum sacrifice. But the exploding deficit reflects old-fashioned tax-and-spend politics. Hiking taxes would reward those responsible for America’s current financial travails.

So the “patriotic millionaires” shouldn’t wait on others to join them. If they believe there is an “ethical and patriotic” obligation to pay more, they have a duty to act. Right now.

The easiest step, as suggested by Sen. Hatch, would simply be to give money to reduce the national debt. But that should be just a start.

So-called economic patriots should routinely inflate their income tax liabilities. Whether they are patriotic billionaires, millionaires, or even thousandaires, they should engage in a little creative accounting. One of the virtues of America’s outrageously complicated tax system is the fact that it offers many opportunities for paying more to the government.

Pick up the 1040. Don’t claim dependents, irrespective of how many children one has. Take the standard deduction instead of itemizing.

Claim extra interest, dividends, and miscellaneous income. Maybe even toss in some nonexistent alimony.

On the Schedule C make up income and don’t claim expenses. Do the same with capital gains. What self-respecting “patriotic millionaire” would take advantage of unfair loopholes in order to deny Uncle Sam needed revenue?

Finally, inflate taxes owed. Don’t take any credits and toss in some “additional taxes” at the end. The IRS might be a bit perplexed about how the numbers were derived, but the agency isn’t likely to turn down extra cash.

This strategy can be repeated year in and year out. “Patriotic millionaires” should do the same for their state and city taxes. Those governments also need money, lots of it!

There is much wrong with America’s tax system. The personal income tax is complex and intrusive. High corporate tax rates place the U.S. at an international disadvantage. Excessive capital gains taxes discourage investment.

But one thing is not a problem: paying the government too little.

It would be nice if all millionaires were patriotic. But love of country does not mean campaigning for increased taxes that would spark even more greedy raids on taxpayers. The best way for everyone to demonstrate their commitment to America would be to battle against the non-stop special interest looting that occurs in Washington.

[costard]

ASL Veteran - I am often wrong and I think you are more often right than I have given you credit for.

I can't see that the rich giving more money to the US government (voluntarily or otherwise) will help anything. To do so voluntarily is only encouragement for the continuation of the madness that led us here: in which case you have to wonder at the impetus for this PR stunt.

[dieseltaylor]

But love of country does not mean campaigning for increased taxes that would spark even more greedy raids on taxpayers. The best way for everyone to demonstrate their commitment to America would be to battle against the non-stop special interest looting that occurs in Washington.

And guess who gets the most benefit from these special interest looting. I agree it is probably the biggest sore in American society. The attack on Iraq was an interesting case of the military complex and the oil industry having a vested interest in spending the tax-payers money for the two industries benefit.

$19.3 bn to Haliburton as at 2007 end. The cost to the US at least $3trillion dollars. And by 2017 $1 trillion on interest costs on the money borrowed for the war.

http://www.guardian.co.uk/world/2008/feb/28/iraq.afghanistan

I could almost weep for the stupidity behind that attack and the cost to hundreds of thousands of people in the US and Iraq. Imagine a US that had never bothered with Iraq and had concentrated solely on Al-q. Must have been a hell of a lot smarter ... but less lucrative.

[dieseltaylor]

On interpreting the figures of who pays what as a percentage. There are lies dammed lies and statistics. The most egrious is percentages. So lets deal in real numbers and look at the people who earn under 33000$ p.a.. Assuming they have electricity, gas, water and eat, pay local sale and state taxes, pay for a roof over their head how much spendable income do they have ?

The tax system, as no doubt you would agree actually obscures what really is going on in the way of real income and real wealth - even the figures above only relate to income. If I am wealthy most of my money will be arranged not to produce income but capital growth.

I was training as an account before I went into banking and believe me in that world 2+2 is not 4 the answer is what do you want it to be. And the bigger the range of tax breaks the easier it becomes.

The US is going the same route as Greece where only the stupid paid taxes

However in financially sophisticated countries it is not the shadow economy that is the problem it isd the clever write offs and specially cases that mean the Government does not collect what you might think.

Off course I do agree that less spending would be a very good idea but when you have rich mates who want something off the gravy train and you want to be re-elected.........

The US, and probably most Governments, could do with a squad to root out pork, and queston extensions of Govt. involvement.

[womble]

What's with taxing charities anyway? Don't they have not for profit status?

The answer for this is in the article linked in the OP. The funds we're talking about are those which are generated for a charity by its ancillary businesses, which don't directly support its registered charitable purpose and which do attract taxation.

In the UK, as I understand it (though I may be severely out of date), the way to handle it is to have the ancillary business 'donate' its profits to the charity, using an instrument which will allow the charity to claim back from the government any taxes which have been paid on the donated money. Used to be called a "Deed of Covenant", I think. It's a bit like Giftaid. So I think it would become a non-issue. No need to avoid the tax since you'll get it back if it was paid, and you won't if it wasn't. So long as the Charity abides by the guidelines on good practice set out by the Charities Commission on things like governance structures, accounting practices, surplus generation (don't plan to break even) and reserve holding (in case of rainy days/for capital investment) and the like, it's all peachy.

[Stalins Organ]

As for the CEO of a bank being paid a huge bonus to do what any good CEO should be doing that really gets my goat. Good customer service should be the aim of all businesses - well any that want to keep in business for the long-term.

IMO the word "bonus" is used fartoo much and has becoem far too perjorative.

In many cases the "bonus" is essentially no more than an "at risk" part of the remunseration package - ie if you don't perform at least adequately then you dont' get it.

That was certainly the case when I was working under such a system a few years ago - if my annual performance assessment wasn't up to par then I didn't get a lump sum that amounted to 2 weeks pay - it wasn't a "bonus".

there was potential for geting more than that - and that section might be accurately described as a "bonus" payment for high acheivement - but the "basic" payment was paid for reaching an "adequate" performance.

If you didnt' get "adequate" then you stood to lose about 4% of your anual remuneration - quite an incentive! If you didnt' erach it then you weer also hauled in for reassessment, training, counselling, etc!!

And also an incentive to managers doing the performance assessments to make sure that everyone did reach "adequate" as it would refelct on them if they didn't, and create friction.....so all in all it wasn't very satisfactory at all!!

And of course it seesm to have little to do wit hte pay of a CEO for a charity....

[dieseltaylor]

The technique coming from America, is an employee management tool but primarily a wages constrainer. The unheralded part on introduction is that it is expected that 20% of a workforce will underperform and this is a method of taggibf them and /or managing them out of the business. This creates stress and tension and provides a churn where cheaper people can be hired in.

You will note that this theory never applies to Boards of Directors. In a totality of say 5000 employees this may be true however once you decide to allocate this theory to small teams across the organisation you can see that it has a problem where a section manager with a team of ten is tasked to grade so mnay as worthy of bonus, so many as adequate and two for special attention. They may all be above average but thats not relevant. Some mangers rotate the the low performance tag around the tea, others just throw it on the guy/gal they least like, and others on the new guy/gal in that year, or on a person leaving to another section. You can see on that basis you could get two low performance tags in quite quickly whilst still being more than adequate.

It is a very sucky system. One of the reasons I left my last serious job was being required to finger who it would be easiest to finger as under- performing. And of course some going throgh a divorce, sick parents/child would be often performing less well. A hateful system when the section leader will be tagged if he does not deliver his 20%.

[dieseltaylor]

Just as an aside - here in the UK we equate health of the population as a part of our civilisation. OK it costs a lot for a freee health service and we look with horror at the situation in the US. Health professionals like charities are meant to be good guys:

Finding people more grotesquely greedy than Wall Street executives would seem to be impossible. However, health insurance CEOs are giving them a run for their money. As the LA Timesreported:

“Leaders of Cigna, Humana, UnitedHealth, WellPoint and Aetna received nearly $200 million in compensation in 2009, according to a report, while the companies sought rate increases as high as 39%….

H. Edward Hanway, former chief executive of Philadelphia-based Cigna, topped the list of high-paid executives, thanks to a retirement package worth $110.9 million. Cigna paid Hanway and his successor, David Cordani, a total of $136.3 million last year….

Ron Williams, the CEO of Hartford, Conn.-based Aetna Inc., earned nearly $18.2 million in total compensation, down from $24.4 million in 2008.”

Aetna CEO Ron Williams has recovered from his down year in 2009 by making $72 million in 2010.

[Stalins Organ]

None of those companies are actually charities tho are they - they are all helath insurance providers - so commercial, profit making organisations?