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Scrutiny helps nonprofits keep the faith

The public's faith in nonprofit organizations is being tested once again by revelations of an executive's high salary and potential conflict of interest.

As reported in the March 24 Outlook, Deborah Saweuyer-Parks, who is president and chief executive officer of the Portland-based Oregon Corp. for Affordable Housing, is under scrutiny from state regulators for the size of her salary and for hiring her husband as a $9,000-per-month consultant.

Saweuyer-Parks founded the company, better known as Homestead Capital, in 1993 and deserves competitive pay in a highly specialized industry. But the $468,000 she received in annual compensation and benefits in the 2004-05 fiscal year is beyond what most people would consider appropriate for a nonprofit agency with 26 employees.

And the arrangement that Homestead had with Saweuyer-Parks' husband for consulting services raises ethical questions that can only be resolved by an independent review - such as the one being conducted by the Department of Justice.

Good work, but is that enough?

Homestead Capital doesn't have the public profile of Goodwill Industries, criticized in 2005 for the size of its CEO's paycheck.

Homestead does not solicit donations directly from individuals, as Goodwill and many charitable nonprofit organizations do. Rather, its funding comes from investors looking to take advantage of the affordable-housing tax credits it syndicates.

The public nonetheless has expectations of nonprofits - and they are not unreasonable ones.

In return for the tax advantages granted to nonprofit organizations, the public expects them to do work that advances the common good.

Citizens also expect, perhaps naively, that administrators of such entities are more concerned about their mission than the compensation they personally receive. Because of the favorable tax treatment that nonprofit organizations receive, the public has a bona fide interest in their accounting and their adherence to ethical standards.

In the case of Homestead, the issue isn't whether the company is doing good work. It has raised more than $440 million since its inception and invested in nearly 5,500 units of affordable housing, most notably in rural areas of Oregon and Washington.

But the nature of this work - helping to provide homes for the impoverished - only underlines the disparity between a highly paid CEO and the clients her agency ultimately intends to serve.

Investigation will clear air

That's why we welcome the state's review of whether Homestead and its president are meeting all of their obligations under state regulations.

Saweuyer-Parks' salary has fluctuated - reportedly dipping to $301,000 in the last fiscal year - and it is entirely possible the state will determine it's not substantially out of line with industry standards.

The state also may surprise us by saying there's nothing wrong with a nonprofit company hiring the president's spouse for lucrative contractual work.

Regardless of the outcome, the state's probe will offer citizens assurance that it is being attentive to the nonprofit sector and that it is acting as a watchdog for the public's interest.