On Sunday, January 12, 2020, an article in the San Diego Union Tribune was published about the Surfing Madonna Oceans Project compensation policies. We want to start off by saying that the article did not report all of the facts. Surfing Madonna’s compensation policies comply with all of our bylaws, board governance and IRS regulations. Contrary to what the article says, our employee compensation to gross revenue percentage is well within the normal range for nonprofits in the USA and well BELOW the compensation percentage when compared to other local North County San Diego nonprofits. We provided that evidence to the writer and for whatever reason it wasn’t reported.
While we thought that Jeff McDonalds’ article was not all that terrible, he left a lot of information and data out, which unfairly painted a picture that we are not following best practices as a nonprofit and that Bob and I are receiving too much of a salary. We took the liberty to create a nonprofit compensation comparison chart for Jeff McDonald based on North County San Diego nonprofits 990s, but, of course, he didn’t acknowledge it…probably because it would have made his article go flat.
Here are some key points that Jeff McDonald chose to leave out:
1. Only 1% of Surfing Madonna’s revenue comes from private donors and 100% of that 1% is used directly for our in-house programs, such as our Surf Camp for Children with Special Needs. None of our donations are allocated to compensation.
2. 99% of our revenue is generated through our race entry fees, which are NOT considered a donation nor are they tax deductible. According to the IRS because the participant is receiving goods and/or services, these funds are not tax deductible. However, we still allocate 100% of the races’ net proceeds for donations, programming and perpetuating ongoing projects.
3. In regards to compensation, according to the IRS, nonprofit salaries are to be fair and reasonable and determined based on what your salary would be for that same job in the private sector. Bob and I are considered Event Directors. In San Diego County Event Directors make on average $102,000 – $174,000 per year, so we are well within the IRS code for a reasonable salary. Furthermore, the Surfing Madonna accountant, who is also an accountant for other nonprofit organizations said we are getting compensated to be Event Directors (not board members) and because our bylaws, which were endorsed by the Secretary of the State of California on July 1, 2011, states this is fair practice. Our responsibilities to this organization doesn’t stop at being the Event Directors. We also assume the role and responsibility of Program Managers and Executive Directors. According to our Bylaws, it is fair and legal practice for a spousal team to take on many roles within the organization.
4. Jeff points out that our revenue in 2018 came down yet our salaries increased. Our salaries are determined at the beginning of each year by the other board members. There’s no way to predict what our revenue for that year will be. In 2018, the entire racing industry was down and that’s gonna happen from time to time. Like every 501(c)(3) nonprofit, some years are good and some are bad. That doesn’t mean the workload goes down. It actually increases because we have to do things to make up for that lost revenue.
5. There are a few well-respected/well-known nonprofits in North County San Diego that are allocating upwards of 50-70% of their revenue for compensation. In 2018, 30% of the gross revenue went to compensation, however, this percentage fluctuates each year based on gross revenue. Every nonprofit is different in overhead expenses, operations, fundraising methods, etc and there is no IRS supported or “correct percentage” for compensation due to the wide variety of operational details of nonprofits. Again, we are well BELOW the gross revenue to compensation percentage when compared to other nonprofits.
All in all, we are a little suspicious and surprised that our nonprofit was chosen when we are abiding by all bylaws and IRS regulations, our compensation policy is well within reason and norm and there are other nonprofits in the area that have a much higher compensation to gross revenue ratio. We literally built this organization from Mark’s Surfing Madonna mosaic to having the Guinness Book of World Records “Largest Beach Run” and then creating the 2nd largest half marathon in San Diego. From those events, we’ve been able to donate approximately $600,000 back to the community: https://
surfingmadonna.org/where-the- money-goes/ .
On the plus side, people in the community know us and know what we do. Surfing Madonna has a great team of directors and we’re extremely proud of what we’ve built and accomplished! We look forward to continuing to serve and enhance our community!
If you have any questions at all, please don’t hesitate to reach out to us or forward this on to friends that might want to hear this.
Thank you for listening,
Bob and Megan Nichols