In A Quest For Context, NIGP and ISM Comparison Raise Very Interesting Questions by Jon Hansen

Posted on May 4, 2015


There is a saying that the numbers don’t lie, so lets go right to the numbers and then analyze what they really mean.

In the year ending 2012, here are the numbers for both the NIGP and ISM* per their respective 990 submissions. By the way I referenced these returns, as they were the most recent in which I had access to both non-profit organizations’ filings.

During this period, the NIGP had Revenues of $5.3 million, Net Income of $476K and Net Assets of $1.7 million.

By comparison, ISM had Revenues of $13.8 million, a Net Income Loss of <$1.4 million> and Net Assets of $8.4 million.

NIGP’s CEO Rick Grimm received $248K total compensation, while then ISM CEO Paul Novak received $353K total compensation.

Now this of course doesn’t include the purported extravagant expense account for Mr. Grimm, that I had written about in my previous post. By the way, I still have not received any response from Tina Borger regarding my request for clarification of the expenses, including the “travel companion” reference in the most recent 990 Return.

However, and on face value, it would appear that the above numbers would further substantiate the concerns being raised regarding Mr. Grimm’s compensation.  Especially when compared to the compensation that the CEO for a private sector non-profit purchasing association, with three times the revenue, received during the same period.

But let’s pause for a moment and consider the following points:

  1. Based on the previous year’s 990 filing, ISM also lost money to the tune of $900K, while the NIGP made money with a net income of $285K.
  2. NIGP’s executive compensation as a percentage of total expense is 4.9 percent, while ISM’s executive compensation accounts for 4.1 percent of their total expenses.

Given the above, one might argue that even if it is out of line, Grimm’s compensation could be – at least in part – justified by the fact that he is running a profitable public sector association enterprise, while the private sector association ISM, is bleeding money every year. When I receive the returns for other associations such as CIPS, it will be interesting to see if ISM’s losses are an exception, or a reflection of an emerging trend relating to the continuing viability of the association model.  But that is a discussion for another day.

bleeding money

Returning our focus to Grimm, and specifically as it relates to the #CodeGate controversy that led to many people coming forward, consider the NIGP Net Income picture, and his corresponding compensation, since 2008:

  • In 2008, the NIGP lost <$349K>
  • In 2009 they lost <$386K)
  • In 2010 they made a profit of $285K
  • In 2011 they made a profit of $476K
  • In 2012 they made a profit of $264K

Putting aside for the moment that the NIGP 2013 filing – which is due on the 15th of this month – will in and of itself be interesting, the first question that comes to mind is why the dramatic turn around starting in 2010?

How has the NIGP been able to buck the ISM money losing trend these past 3 years? I know that they sold their building and are leasing it back, but how did they turn it around?

Let’s also look at Mr. Grimm’s compensation, starting with the last year that the NIGP lost money, 2009:

  • In 2009, Mr. Grimm’s compensation was $228K (NIGP lost <$386K> that year)
  • In 2010, Mr. Grimm received as compensation $239K (NIGP made $285K that year)
  • In 2011, Mr. Grimm received $241K (NIGP made $467K that year)
  • In 2012, Mr. Grimm’s compensation was $248K (NIGP made $264K)

Based on the above, it would appear that Mr. Grimm’s compensation should have raised red flags going back to 2009. Particularly given the fact that the NIGP lost <$386K> that year.

Yet here we are in 2015, and after three successive years of profitability during a period of time that ISM has lost money, suddenly there is a cry of indignation regarding his compensation?

It would have made more sense to bring out the pitch forks and torches back in 2009, than it does today after he has led the organization to three consecutive years of profitability. So why raise the issue now?

One can only think that it is possibly a combination of many things, perhaps even the source of said profitability, that has ruffled more than a few feathers?  As one anonymous source put it, “one year we were suddenly flush with cash . . . how?”, while another made the statement that if “he were still alive and saw how Grimm ran the NIGP today, Lou Spangler would hit the roof”.

income source

Again, the latest returns for both the NIGP and ISM will be very interesting even beyond #CodeGate, including what it means relative to the ongoing viability of the association model.

Perhaps on top of anything else that my investigation may turn up, it is Grimm’s response to an industry and profession undergoing monumental changes, that will represent the straw that broke the camel’s back relative to his continuing leadership of the NIGP.

* ISM or the Institute for Supply Management was founded in 1915, and was the first supply management institute in the world.

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