Goodwill Central Coast Finances Questioned

Board of Directors Member Jess Brown Resigns in Protest

By Noel Smith

Twenty-five year Board Member of Goodwill Central Coast Jess Brown, who is also the Executive Director of the Santa Cruz County Farm Bureau, has resigned due to recent financial decisions made by the non-profit’s board of Directors. Brown submitted his letter of resignation on April 19 stating in his letter, “I have expressed strong concerns about a number of recent fiduciary decisions by Goodwill Central Coast involving large capital expenditures and executive compensation.”

The capital expenditures Brown referred to involved the decision to move the Goodwill headquarters from Santa Cruz to Salinas. Brown wrote, “At the initiative of the CEO, the organization has embarked on a spending spree including the current proceedings to sell the existing headquarters building in Santa Cruz for $5.5 million and purchase and remodel a new headquarters building in Salinas for approximately $16 million. The sale of the headquarters building was done without putting it on the open market.”

The other issue Brown has concerns about is the President & CEO of Goodwill Central Coast, Ed Durkee and his compensation package. Brown’s letter states, “…the fact that he (Durkee) had agreed to a compensation package when he accepted the position less than three years ago, the CEO pressured the board to raise his salary and benefits. His relentless demand for significantly more compensation during the past year became the focal point of the executive committee’s work.

“A consulting firm was hired to do a survey of compensation among comparable organizations. After the draft report was completed, the executive committee asked the firm to add non-profits from the three counties that Goodwill Central Coast serves. Those comparisons were not included in the final report, but non-profits from Los Angeles and out of state, which have higher compensation, were kept in the comparisons.”

Brown continues, “Throughout the process, the CEO threatened to leave if he was not paid at a much higher level. The end result, as you know from the board action taken last week, is to increase the CEO’s salary by almost $65K a year, for a total annual compensation of over $300K. This is a 36% increase on top of the raise he was granted in 2015. His salary is now significantly more than that of the Santa Cruz City Manager who manages a $212 million budget and 820 full time plus several hundred temporary employees. The Goodwill annual operating budget is $28 million with significantly fewer employees than the City of Santa Cruz.”

Brown said later when interviewed that the recent compensation increase actually amounted to approximately $100,000 when factoring in salary, retirement and other benefits.

Jondi Gumz reporting in the Sana Cruz Sentinel writes, “A 2015 survey by Nonprofit Compensation Associates covering 537 nonprofits from the San Francisco Bay Area to the Central Coast, Sacramento and the Central Valley found only 10 percent were paid a base salary and bonus exceeding $235,000. – In the Central Coast, which includes Santa Cruz and Monterey counties, only 10 percent of the 51 responding nonprofits paid a base salary more than $200,200; the average was $124,000.”

Brown ended his letter, “I cannot condone the exorbitant spending that is currently occurring. There is no reason for Goodwill Central Coast to be incurring debt.”

Times Publishing Group contacted Walt Henning, the current Chairman of the Board of Directors of Goodwill Central Coast for a response to Brown’s letter of resignation and its concerns. Here is some of Henning’s reply regarding the move to Salinas, “The new facility in Salinas has been determined to be a good solution to support our growth. The Facilities Committee, Finance Committee, and Strategic Planning Committee have all spent countless hours evaluating our financial position and our ability to handle this move.” He continued, “Our CEO, Ed Durkee, involved the Board in every step of the creation of this strategy and the Board fully supports it. Goodwill Central Coast continues to be in a strong financial position, as it was when we hired Ed as CEO in July, 2013.”

Regarding the compensation issue Henning writes, “… the recently approved increase was implemented upon the recommendation of a well known and respected compensation consultant. The new salary was set at exactly the 50th percentile of CEO’s in 120 similar non-profit organizations across the United States. We chose to adopt the exact salary level recommended to us by our consulting firm,…” “In setting the CEO salary, we also took into consideration Mr. Durkee’s high performance and attainment of annual goals. Our consultant found that Mr. Durkee’s previous salary was about 36% below the median for CEO’s in comparable non-profit organizations.”

Henning ends his letter saying, “Of course, the Board also regularly reviews financials and the performance of core activities to assess the financial health of the organization. We are financially strong and have the resources to make the planned investments.”

Other issues were addressed in both Brown’s and Henning’s letters such as the state’s mandated rise in the minimum wage, and the future of the flea market in Santa Cruz.

Goodwill’s move from Santa Cruz to Salinas will greatly effect many of the organization’s staff and has indeed raised some questions and concerns about the future of the non-profit’s finances.