Friday, August 14, 2009
Tax regulations require that the compensation paid to nonprofit executives be "fair and reasonable." A board is expected to make that determination based on comparables - what a similar executive would earn for a similar job. For many nonprofits, getting the information necessary to support a decision on compensation can be difficult. GuideStar just announced a new service - CEO Compensation Checkpoint - that "evaluates a nonprofit CEO's compensation against a group of peer organizations" and then prepares a report for use by the board. This blog is not endorsing GuideStar's service or product, and there is a fee for the service, but it is useful to know that the service exists. It is also a reminder that a lot of IRS regulations, while adopted with the worthy goal of promoting "good" behavior by nonprofits, will cause many nonprofits to incur extra expenses.