Nonprofit Executive Compensation Study

Navigating executive compensation can be challenging for any organization, particularly nonprofits. You need to attract and retain talented leadership to help you further your mission. But at the same time, nonprofit executive compensation is under increased scrutiny from the public and the IRS.

Under U.S. tax law, compensation paid to senior executives at nonprofit organizations should not exceed a “reasonable” amount. And nonprofit executive compensation that is deemed unreasonably high can result in substantial penalties for the executive. Penalties can also apply to board members and leaders who knowingly approve unreasonably high compensation.

If the IRS challenges compensation after it has been paid, you can establish reasonableness by providing comparable data from similarly situated organizations. The tax law, however, includes a provision that encourages advance determination.

By following certain steps before paying compensation to an executive, a tax-exempt organization can establish a presumption of reasonableness that will be difficult for the IRS to refute in many cases. CapinCrouse can help you evaluate the competitiveness of your nonprofit executive compensation while complying with IRS rules and protecting your executives and board members from costly penalties.

 

Insight and Experience for Providing Competitive Compensation and Maintaining Compliance

Since CapinCrouse is exclusively focused on serving nonprofits, we understand the unique challenges you face in setting executive compensation and the complexities of the IRS’s executive compensation rules.

We use that experience and insight to help your nonprofit:

• Navigate the executive compensation requirements
• Meet the rebuttable presumption of reasonableness
• Comply with IRS filing requirements
• Protect your organization’s reputation and leadership

Rather than a broad survey about nonprofit executive compensation in general, the CapinCrouse Nonprofit Executive Compensation Study is designed to provide compensation data and insight specific to your organization.

Each study consists of two service components to meet your organization’s needs:

• Compensation Study – A comprehensive analysis of the executive position and compensation using industry compensation study surveys and the development of specific data sets. You will receive a written report providing the supporting data for the rebuttable presumption of reasonableness.
• Compensation Comparison Analysis – An analysis of peer compensation data from approximately four data sets, compiled into a worksheet accompanied by a narrative explaining our findings.

At the conclusion of your CapinCrouse Nonprofit Executive Compensation Study, you will receive a detailed report to help your organization make informed compensation decisions. This will give your leadership the tools it needs to compare, quantify, analyze, and approve compensation amounts for your leadership in a structured and informed manner. You can see a report summary here.

Each study is valid for two years. If you have a leadership change or a previous compensation study is reaching the two-year mark, we recommend that you have a new study completed.

 

Get Peace of Mind About Your Nonprofit Executive Compensation

Our team is equipped with the latest data and strategies to help you offer your executives competitive compensation while complying with IRS rules, protecting your executives and board members from costly penalties, demonstrating good stewardship of your resources, and maintaining public trust.

Please contact us to learn more or to schedule a call with our compensation specialists.

We also offer a Nonprofit Employee Compensation Market Study for your non-executive staff. Learn more.