Human Resources: Compensation
See Also: Conflict of Interest Policy in Sarbanes-Oxley Act of 2002
Executive Compensation
The IRS Form 990 asks nonprofits about the process used to approve the compensation of the executive director/CEO (and certain other key employees): "Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?" (Form 990, Section VI, Part B, line 15) Nonprofits filing the Form 990 must describe the process on Schedule O.
Intermediate Sanctions
The phrase "intermediate sanctions" refers to the penalty excise taxes imposed by the Internal Revenue Service when individuals associated with a tax-exempt organization receive excess benefits. Employee compensation is one area that can be subject to intermediate sanctions.1
Resources
- National Council of Nonprofits: Executive Compensation Policies
- National Council of Nonprofits: Sample Policy for Board Approval of Compensation
- Guidestar.org: Best Practices in Nonprofit Compensation
- IRS.gov: Report on Exempt Organizations Executive Compensation Compliance Project Parts I and II March 2007
- Nonprofit Association of the Midlands: Annual Salary & Benefit Survey
- SHallPartners.com: What is Reasonable Compensation for a Nonprofit Executive?
Articles
- NonprofitQuarterly.com: What is Reasonable Nonprofit Compensation? A Guide to Avoid IRS Penalties June 5, 2011
- NOLO.com IRS Rules on Reasonable Compensation for Executive Directors