Non-profit sector CEOs pay-rate hike beats inflation, profit-seeking peers. Top non-profit executives got a 4.8% median salary increase in 2005, easily outpacing last year's 3.4% increase in the rate of inflation, according to a Chronicle of Philanthropy study of 332 organizations.

Going on information from 241 non-profits that provided data for both years, the median compensation for chief executives was $327,575 last year as against $316,058 in 2004.

Al though Fortune 500 executives made more, with a median salary-and-bonus take of $2.4 million, this 2.9% year-over-year increase in compensation failed to keep pace with inflation.

Great expectations

One reason that non-profit leaders kept ahead of inflation may be that many candidates are approaching their retirement years, making it hard to tempt candidates without solid incentives.

"You have a continually expanding pool of nonprofits and, at the same time, the number of retirements continues to go up," says James Abruzzo, managing director for non-profit recruiting A.T. Kearney, a Chicago-based executive search firm. "When you are recruiting a new foundation head, you can't attract a person by offering an average increase in pay." Rather, he adds, candidates are looking for something in the order of 15% to 25% over their present salaries.

Topping the list of earners were executives at hospitals and in arts groups; the medical motif has been strong in earlier years as well. This year, Harold Varmus of New York's Memorial Sloan-Kettering Cancer Center , came out on top with $2,491,450. In private foundations, Martha Lamkin, president of the Lumina Foundation for Education in Indianapolis topped the list with $780,326.

"I think organizations often realize that they have to pony up more than they intended when it comes to getting the person they want," says Trent Stamp, executive director of Charity Navigator, a non-profit watchdog based in Mahwah, N.J.

Experts say salaries will increase even more as younger leaders enter the field with greater expectations. The Bridgespan Group, a Boston-based consultancy, estimates that nonprofits will need as many as 80,000 new senior managers by 2016. -FWR

.