This is the time for tax-exempt organizations to increase the time and attention devoted to investigating, deliberating, documenting, and reporting executive compensation.
The organizational steps to take to setting nonprofit executive compensation.
Market pricing is a formal process for determining the external value of jobs. This is used in conjunction with the compensation philosophy; in the example above, that is “paying at 50th percentile of human service nonprofits of our size in the Washington, D.C., market.”
Regardless of size or tax status, all organizations need to attract, motivate, and retain the right employees to ensure their continued success.
Executive pay gets reported on Form 990 filings and is reviewed by the IRS for “excess benefit” issues. IRC Section 4958 (intermediate sanctions) does not allow 501(c)(3) organizations to pay more compensation than is “reasonable.”
If you follow the steps found in this white paper, you'll make compensation decisions that will pass review by the IRS and other stakeholders and meet the goal of attracting and retaining the executives needed to sustain the organization
