Goodwill husband-wife team earns nearly $800,000

jshaffer@newsobserver.comFebruary 9, 2013 

— As president of the Goodwill Community Foundation, Dennis McLain directs a chain of 36 stores stretching from Durham to Jacksonville, selling used sport coats and secondhand dresses to some of North Carolina’s poorest citizens.

He states proudly in promotional material that workers in those stores earn an average $19.58 an hour in combined salary and benefits, and that Goodwill provides free job training to millions worldwide.

But McLain receives an uncommonly large portion of the nonprofit’s generosity, earning more than $430,000 a year in pay and other benefits, including membership at Raleigh’s exclusive Capital City Club. His wife, Linda, Goodwill’s executive vice president, brings home $365,000, according to nonprofit disclosure forms filed with the Internal Revenue Service for 2011.

Their compensation rose nearly 11 percent in that year, and 20 percent since 2008.

McLain declined to comment by telephone or email. He is working for Goodwill overseas for several weeks. Spokeswoman Jenny Martin said she did not know in which country.

Through Martin, Goodwill’s board released this statement:

“The board of directors is proud of the growth of GCF under the leadership of the McLains during the last 30 years. It is our position that their compensation reflects the impact that their leadership has had on the people of the Research Triangle, eastern North Carolina, North Carolina, the U.S. and the global community.”

Martin said Goodwill follows IRS guidelines and that the McLains’ pay falls in line with top salaries at organizations of similar size – including for-profit firms. But the McLains’ compensation continues to raise eyebrows in the Triangle, raising the question of appropriate pay for top executives at a nonprofit that relies almost entirely on donated clothing and books. Goodwill’s IRS documents for 2011 list a $32.6 million value for clothes and household goods it received, a number that represents most of its total revenue.

By comparison, the YMCA of the Triangle pays its CEO $289,444 to manage a larger budget with more than twice the number of employees. The Food Bank of Eastern and Central North Carolina pays its president $163,439 out of gross receipts that double Goodwill’s.

Meanwhile, the average compensation, including bonuses and other benefits, for a nonprofit CEO in the Southeast is $251,900, according to Total Compensation Solutions, an independent human resources consulting firm based in Armonk, N.Y.

According to its IRS forms, Goodwill’s 12-member board determines executive pay using a national survey that includes private, for-profit firms.

Before relocating to Durham with her family, Deborah Sorin worked in New York as a mergers and acquisitions investment banker. She also worked as an equity analyst in Portland, Ore., where she first crossed paths with Goodwill.

“I bought half my wardrobe there,” she said. “They used the building next door to train people for jobs.”

In Durham, spending much of her time raising young children, she looked for a nonprofit to aid with volunteer work and thought of Goodwill.

But when she looked at the IRS disclosure forms, and the McLains’ compensation in particular, she was “appalled.”

“The more I looked into it, the worse the story got,” she said.

Charitable perks

Dennis McLain earns $260,801 in base pay and $169,438 in extra compensation. A 2012 audit report shows Goodwill also approved a tax-free retirement housing allowance for the president, $2,500 a month from his retirement until his death, and a retirement medical plan paying up to $9,000 a year.

Linda McLain’s base pay totals $334,195, with $30,938 in other benefits. Four other employees earn six-figure salaries.

One Triangle nonprofit, L.C. Industries, a Durham manufacturer, pays its CEO more than $800,000. But that company, which employs and trains blind workers, takes no charitable contributions or grants.

It’s hard to judge salaries, said Todd Cohen, editor and publisher at Philanthropy North Carolina. They’re a subjective measure of performance, he said. In general, people working at nonprofits are underpaid, he said.

“On the face of it, it sounds very high,” Cohen said. “There are people at the top of their fields running large organizations that don’t make that much.

“The fact that two people are married and getting a lot of money on its face isn’t right or wrong, but it certainly is something that would lead one to ask questions – especially in this environment where everyone is struggling.”

Growing the mission

Methodist minister Edgar J. Helms founded Goodwill in Boston in 1902. More than 150 independent regional Goodwills now operate nationwide.

A Methodist minister himself, McLain, 70, has served as Goodwill’s local president since 1982. When he took over, Goodwill of Eastern North Carolina was in “shambles,” former board chairman Ken Allman said in an N&O story in 1996.

At that time, the group had little money in the bank and its net worth came in at less than $300,000. Today, Goodwill employs more than 600 people and has more than $63 million in assets, according to its 2011 audit.

Its new stores open to huge crowds. In July, a new Holly Springs Goodwill drew a line that wrapped around the building, some of its customers having come from Atlanta in search of bargains. Stores in Wilson, Rocky Mount and Knightdale feature clean, free-standing buildings where women’s dresses cost $4.59 and men’s sport coats sell for $7.99.

Much of Goodwill’s revenue goes toward running these stores, 20 of which are in the Triangle, and for operating its Web-based educational programs. When the Holly Springs store opened, McLain told the Southwest Wake News, “These are good-paying jobs with good benefits. We felt like there was room in this area for another store. It’s a chance for us to grow our mission.”

But Goodwill’s mission extends outside North Carolina. A YouTube video from last September shows McLain in Cambodia, and another video shot six months ago shows the GCF team in Colombia.

Its 990 federal tax form for 2011 shows $1.36 million spent on “donations and related costs” to nonprofits outside of North America.

Martin, the Goodwill spokeswoman, stressed that the money the nonprofit sent to foreign charities in the last tax year represents a small slice of its budget, less than 4 percent.

“They’ve always felt like they have a responsibility to children around the world,” Martin said.

But its disclosures to the IRS provide no details about who received this funding. The names of organizations Goodwill sent checks and wire transfers are left blank on the tax documents, labeled only as sub-Saharan Africa, East Asia or South America.

Martin directed questions about Goodwill’s disbursements to the website www.gcfglobal.org. That site lists 19 groups, including New Life Center of Zambia and the Rural Women Project of Mozambique. But it provides no specific information about how much money Goodwill gave each group and for what.

It’s common for local charities to send money far from where they’ve raised it, Cohen said. “It ultimately comes down to how transparent you are being,” he said. “What are you telling donors?”

Martin also pointed to local charities that receive Goodwill funding, including more than $150,000 to Boys and Girls Clubs and nearly $70,000 to the Tammy Lynn Center for Developmental Disabilities and $150,000 to the Baptist Men in the 2011 tax year.

Those gifts to North Carolina groups total $1.1 million.

In Pitt County, Steve Stephenson has seen much of it come to the Boys and Girls Clubs for which he is president of the board. Goodwill provided a challenge grant for half the budget of a club in Greenville and another in Kinston, he said. Without the McLain’s help, he said, the club in Kinston would be closed.

He understands people’s concerns about overseas spending, but he said, “Dennis McLain is a Methodist minister. The Methodist church has a very strong culture of carrying the Lord’s work all around the world. There have been times when I have wanted the church to focus more locally. But if you read the Scripture ... it is to take the Lord’s work around the world.”

Changes to training

In recent years, Goodwill has shifted the direction of its outreach.

The nonprofit no longer offers its two-week computer courses at its Global Learning Center in Raleigh. More than 10,000 people took those courses between 1992 and 2006.

“I really hope people walk away with an understanding that as the technology changes, (Goodwill) is a place where they can get an immediate answer,” McLain told The News & Observer in 2004. “They find a very responsive environment.”

All of that job training has been shifted to a website: gcflearnfree.org. Free self-guided courses in several computer programs, such as PowerPoint and Microsoft Word, are also available.

Goodwill spokeswoman Martin said 500,000 people in North Carolina took lessons on the site in 2012, and 4 million worldwide. The idea was to reach more people beyond the confines of a classroom.

“They actually have had a substantially high participation rate,” she said. “You’re talking 50 people at a time versus 500,000.”

But much of the online work involves basic math or alphabet skills. To learn PowerPoint or Word programs, a job-seeker would need a computer equipped with the specific program. Martin said many people take these courses in public libraries.

“We’re trying to reach the masses,” she said.

In 2008, Goodwill operated a program using its 14-acre garden and 4,300-square-foot greenhouse to teach gardening and horticulture skills to people with emotional and physical disabilities. Last year, the nonprofit donated more than 20,000 pounds of produce to the Food Bank.

“It’s a proven fact that horticulture, working with plants, is a healing means of support for anybody,” Kimi Dew, who led Goodwill’s agricultural program, told The News & Observer in 2008.

But it no longer works with the disabled. Now those fields are tended with volunteer labor instead.

Martin said Goodwill thought money that used to be spent on rehabilitation could be better spent on local charities, such as the Family Support Network in Cumberland County, which received more than $100,000 in the 2011 tax year.

Its tax disclosure also states that Goodwill no longer provides opportunities for high school students with special needs to earn credits toward a high-school diploma. Martin said schools had transportation issues and participation in the program was dwindling.

Leadership to continue

For at least two years, Goodwill retained and paid a real-estate brokerage owned by developer Brantley Tillman, who sat on its board of directors. The board chairman until 2011, Tillman’s firm was paid $213,000 in 2010 and $108,000 in 2009 for commissions on land purchases.

Tricia Lester, vice president of the N.C. Nonprofit Association, said family members can sometimes hold top positions together because their value to the nonprofit overrides any appearance of conflict of interest.

But a board member doing contract work for the nonprofit “would raise a red flag,” she said.

Tillman did not respond to a call seeking comment. In response, Martin said Tillman would have recused himself from any vote on this money, eliminating a conflict of interest. She pointed out that the YMCA of the Triangle also reports board members doing contract work, including one for more than $600,000.

Goodwill’s board concludes its statement, which Martin said would be made available at any of the GCF stores:

“The board thanks the president, executive vice president and their team for their vision and leadership over the last 30 years and look forward to their continued leadership creating a new future for GCF so that all can have a better life!”

Shaffer: 919-829-4818

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