Executive Compensation in the Nonprofit Sector: Getting It Right

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Executive Compensation in the Nonprofit Sector: Getting It Right

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Public companies are questioned on #ExecutiveCompensation. What's a #nonprofit to do? http://huff.to/IfeQqn #corpgov
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Monday, April 23, 2012 - 1:30pm

Excessive executive compensation is at the forefront of discussions about public companies, but what about the nonprofit sector? In fact, one of the most important things that nonprofit boards can do to strengthen the organizations that they govern is to get the salaries right for the CEOs of their nonprofits.

What does it mean to get compensation right? And why does it matter so much?

Getting it right is called "fair and reasonable" by the IRS. It's what the law requires, it's what any CEO wants, and it's what any donor and member of the public expects.

Executive compensation: Getting it wrong has serious consequences

If a nonprofit violates the IRS standard by exceeding "fair and reasonable" compensation, then the organization can be fined or their tax status can be revoked. Under the excess benefit transaction excise taxes law, also known as intermediate sanctions, the executive who is overpaid can also be fined.

See continuation on Huffington Post....http://huff.to/IfeQqn