Sept. 29 (Bloomberg) -- Glenn Lowry, the director of New York's Museum of Modern Art, was the best-paid chief executive of a U.S. nonprofit art institution last year, with a total compensation package of $1.7 million in 2007.

Lowry, a Harvard University-trained Islamic art specialist, was followed by Peter Gelb, general manager of New York's Metropolitan Opera, who had a $1.1 million compensation package and Michael M. Kaiser, president of the John F. Kennedy Center for the Performing Arts in Washington, who made $1.06 million, according to a new Chronicle of Philanthropy survey of the 291 nonprofits that receive the most donations from private sources.

Compensation for museum directors has soared in recent years as the competition for top managers has increased.

``Some people believe that nonprofit managers need to be compensated well because they're managing complex institutions, and others think this is too excessive,'' said Stacy Palmer, editor of the Washington-based Chronicle. ``When people see these salaries, they don't always think that this is appropriate for a nonprofit institution.''

The seven-figure pay packages have sparked criticism from some watchdog organizations and patrons.

``These extreme cases are offensive to our donors,'' said Ken Berger, president of the Mahwah, New Jersey-based Charity Navigator, which tracks the spending of nonprofits. ``If you're a public charity, the idea that it'll give a salary in the millions of dollars is offensive.''

Allowance for Apartment

Lowry's pay included $928,818 in salary, $455,581 in benefits and a $336,000 expense allowance, according to the Chronicle's survey.

MoMA spokeswoman Kim Mitchell said Lowry's $336,000 expense allowance is a non-cash benefit equal to the cost of renting his apartment in Museum Tower, which MoMA owns. The 52-story condominium at 15 West 53rd St. in Manhattan is adjacent to the museum.

Kaiser's base pay of $1.02 million was the highest among arts organization leaders, followed by Gelb, who was paid $1 million, and Lowry, who made $928,818.

Other top pay packages in the survey went to Ellen Futter, president of New York's American Museum of Natural History, who made just over $1 million in total compensation, and the Boston Symphony Orchestra's managing director, Mark Volpe, who was paid $957,000.

The median pay for nonprofit leaders in the Chronicle's survey rose 5 percent last year. Palmer said the median base salary of chief executives at large companies grew by 3 percent to $1.03 million, according to a study by the San Mateo, California-based Equilar, which tracks executive and board pay at for-profit companies.

$4 Million Bonus

In last year's survey, Philippe de Montebello, who is retiring as director of New York's Metropolitan Museum of Art, was the top-paid executive of a U.S. nonprofit, with a $4.7 million package in 2006. It included a $4-million bonus for his 30 years at the head of the largest U.S. arts institution.

In 2007, de Montebello received a total pay package of $766,212, which includes $575,068 in salary and $110,731 in expense allowances.

Large nonprofits ``require people with top management skills,'' Palmer said.

``They're also looking to the business world for talent, where pay packages are much higher than in the nonprofit world,'' she said. For-profit chief executives are usually giving up a lot of perks when they come to a nonprofit institution, ``so the salary has to be higher than it otherwise would,'' Palmer said.

The top executive at a nonprofit doesn't always get the biggest paycheck in the organization.

Skin Cancer Specialist

Steven Berstler, the former chief investment officer for the Metropolitan Museum who died of cancer in April 2007, had a total pay package of $1.42 million, nearly twice as much as de Montebello's. Berstler's $725,545 base pay included a $311,403 bonus, and his benefits package of $697,063 included $657,462 in deferred compensation.

David N. Silvers, a clinical professor of dermatology at Columbia University and noted skin cancer specialist, had the biggest pay package for someone who wasn't in the top job. He received $4.3 million in total compensation last year.

His boss, Columbia President Lee Bollinger, had a $1.42 million package, which included $911,284 in base pay and $500,610 in benefits.

Silvers also outearned Northwestern University President Henry Bienen, who had the largest pay package among leaders of private, nonprofit educational institutions. Bienen made $1.74 million last year, including $1.3 million in base pay.

`Cut Those Salaries'

Berger, of Charity Navigator, said he expects to see a decline in gifts to nonprofits by individuals, corporations and foundations and a drop-off in generous executive pay packages because of the turbulence in the U.S. economy.

``If a nonprofit's executive pay isn't in line with its industry's standard, it should cut those salaries,'' Berger said. ``And the CEO should be making a hefty contribution to the organization as well in these times. Without that, the most precious commodity to a charity, which is trust, will be lost.''

To contact the writer on the story: Patrick Cole in New York at pcole3@Bloomberg.net.

Last Updated: September 29, 2008 00:01 EDT