Often, we have a knee-jerk, visceral reaction when we find out a CEO of a non-profit is making $500,000 while employees are making average wages. Aren’t non-profits supposed to be altruistic, with loftier goals than, well, profit? Yes, but it’s not that simple.

In order to function, charities must be run by experienced professionals, including the executives. An effective CEO must deliver the results that the donors expect, thus improving the charity’s effectiveness and optimizing fundraising and return on investment (ROI).

Overhead is not the enemy

When looking at nonprofits, “overhead” is typically a bad word–a nebulous umbrella term for wasted funds, bureaucratic shenanigans, bloated salaries, and even graft (as in the case of the Haitian relief efforts).

In for-profit corporations, overhead is an integral piece in generating revenue. No one questions the efficacy or necessity of investing in infrastructure in order to make money. So why do we expect nonprofits to magically turn your donations directly into aid with the expectation of less overhead?

Because, since CEO compensation is part of overhead, it is often in the moral spotlight. What people may not realize is that non-profit executives make vastly less than private sector executives, hands down. We are talking five to six figures as opposed to eight to nine figures and up (way up). So why are non-profit CEOs seemingly not equal in worth to their for-profit counterparts? Does the public expect nonprofit CEOs to live on paltry monk-like salaries? Possibly.

Equating morality with frugality

By choosing to work for a non-profit, CEOs know that they will be taking a massive pay cut. Presumably, that is the price to pay for wanting to do good in the world instead of chasing personal profit. In other words, the mentality is that paying a nonprofit leader fairly is tantamount to taking from the needy.

But in truth, a large scale charitable organization needs to invest money into itself in order to make and disperse funds for the cause. Compensation packages for executives are part of this investment, as is money spent on advertising and fundraising (which are also frowned upon in the nonprofit sector). It can be argued that instead of frugally measuring overhead as a peice of a small pie, we should be trying to make a bigger pie––by looking at the bigger picture.

Fear of playing a bigger game

The kind of people who donate to charities generally do it for two reasons: They want to make a modest contribution from their own hard-earned money in order to help further a worthy cause, or they want to make big changes to the way things work in order to solve major problems.

Both types of donations requires taking risks. And risk–even in a nonprofit–means putting donors’ money on the line. In order to have an impact, it may be necessary to behave more like a major corporation then a bake-sale––which requires putting a strong leader at the helm.

The reality is, when investing in or donating to a non-profit, you are entrusting your money to an organization that will maximize contributions to the actual cause––and the buck stops with the CEO.

Just as in a Fortune 500 business, the CEO is ultimately responsible for delivering results. They are expected to make the organization shine through performance. When thinking about how much a CEO is worth, we must ask ourselves: How much should we value them as an investment in the organization? How do we monetize what a top notch executive brings to the table?

The answer may be somewhere between morality and practicality. After all, having modest expectations for a CEO’s pay is not the same as demanding puritanical expectations of the CEO to relinquish adequate compensation.