Charity is big business in Maryland, and some of the providers provide the compensation packages to prove it.

Seven of the state's 501(c)(3) organizations - charities, the most common nonprofits - paid more than $1 million in salary and benefits to at least one official during their 2003 fiscal year, according to the most recent Internal Revenue Service data consistently available. Thirty shelled out more than $500,000, a Sun analysis found.

A generation ago, hardly anyone could expect to be compensated handsomely for working in the nonprofit sector. But now the largest charities - here and nationwide - are bigger, more complex and more likely to compete with for-profits than ever before. They have chief financial officers, head investment managers, attorneys on staff. And more and more frequently, they're looking for chief executives with corporate experience.

At the same time, they're offering bonuses, long-term incentives and benefits that are more reminiscent of publicly traded companies than the neighborhood homeless shelter.

"Nonprofits are realizing that they have to compete more intensively with the business sector for certain kinds of key positions," said Lester M. Salamon, director of the Johns Hopkins Center for Civil Society Studies. "That's probably pushing the wages up."

It's also pushing lawmakers on Capitol Hill and auditors with the IRS to question whether salaries are getting excessive - and whether some U.S. nonprofits are for-profits in tax-exempt clothing.

'The real stake here'

"The real stake here is that ... more and more of the supposedly taxed economic activity of the country will end up in this sector that is not taxed," IRS Commissioner Mark W. Everson told the Senate Finance Committee last month. The IRS is stepping up examinations of abuses in the nonprofit world, including pay and perks.

Nationally, nonprofit hospitals and health care systems in particular are coming under fire for operating in ways that critics claim are little different than for-profit counterparts. Executive salaries make them an easy target: They're usually the top-paying charities.

That's true in Maryland. Compensation was highest at Marriottsville-based Bon Secours Health System Inc., which employs more than 25,000 across 21 hospitals and other health care facilities in nine states. It paid then-chief executive Christopher M. Carney more than $1.5 million in salary, bonus and benefits in fiscal 2003.

The rest of the top five that year: University of Maryland Medical System Corp., the Johns Hopkins Health System Corp., MedStar Health Inc. and LifeBridge Health, which each paid their top executive at least $1.2 million.

All say their boards study market trends - often with the help of consultants - before crafting compensation packages. Johns Hopkins aims to pay significantly more than average for well-known medical institutions because it believes that holding on to its star executives and doctors is the way to maintain its No. 1 spot on U.S. News & World Report's annual ranking.

Keeping 'crown jewel'

"We want to keep the crown jewel of Maryland in its status as the crown jewel," said Shale D. Stiller, chairman of the compensation committee of Johns Hopkins Medicine.

He thinks they're getting good bang for the buck from President Ronald R. Peterson, who earned $1.4 million in 2003.

"For years, he never took a vacation," Stiller said. "He's usually at the hospital at 6:30 in the morning, and I think he rarely leaves until 9:30 or 10 in the evening."

The Sun's analysis included about 200 sizable nonprofits, typically with at least $20 million in annual income, using numbers reported to the IRS by the nonprofits and then collected by GuideStar, a national database of nonprofit information. The study found that:

  • Nonprofit executives can get golden parachutes too. MedStar Health of Columbia, which runs seven hospitals and other health services in the Baltimore-Washington area, gave multimillion-dollar severance packages to former executives over the past few years - the lingering result of the 1998 merger that created MedStar. Michael Merson, who headed one of the two merged organizations, was paid about $925,000 in fiscal 2003 alone.

  • Some raises beat the heck out of inflation. Maryland General Hospital in Baltimore paid chief executive Timothy D. Miller nearly 80 percent more in fiscal 2003 than in the previous year. Hospital parent University of Maryland Medical System hastens to add that his $705,000 compensation package was larger in part because he opted to take some deferred compensation he'd earned earlier. That was before Miller resigned in the wake of a scandal in which the hospital laboratory sent out hundreds of possibly inaccurate medical test results.