How does your compensation compare?

• Published date: 01 March 2017
• Date: 01 March 2017
• DOI: http://doi.org/10.1002/ban.30438

8 Board & Administrator Special Report

DOI 10.1002/ban © 2017 Wiley Periodicals, Inc., A Wiley Company All rights reserved

It’s not just the IRS watching:

Your salary is out there for all to see

Who really cares how much you earn? You’d be

surprised. It’s not only your board members who

are in tune with how much money you make.

Today, with all the tools people have available to

them, the nonprofit CEO’s compensation should

be considered “public information.”

So, who cares? Your staff members, your orga-

nization’s donors, the nonprofit’s competitors and

the media all may be paying attention, according

to a Venable LLP presentation, “Top Trends and

Traps in Nonprofit Executive Compensation.”

Venable presenter Matthew T. Journy said IRS

Area Manager Peter Lorenzetti identified executive

compensation as “far and away the most common

risk area for nonprofits” and as an issue that the

IRS will “look at on every audit we do.”

So keep this in mind: IRS Form 990 informa-

tion is out there on the web at charity watchdog

sites such as GuideStar. Here are some issues you

should give thought to:

1. Issues with Form 990. If you check the box

indicating that during the tax year your organiza-

tion did provide an “excessive benefit,” Journy

said “you are essentially saying to the IRS, ‘Please

examine us so you can collect money.’”

This is because excess benefit issues have be-

come a revenue game for the IRS, so they are a big

red flag to their auditors, Journy said.

2. Impact of your pay on organizational mo-

rale. Employees can visit sites such as GuideStar

to view your compensation. When at another com-

pany, Journy would prepare 990s for organiza-

tions and would be asked when the 990 would be

filed. Employees wanted this information so they

could check up on how much money their bosses

were making, he said.

3. Digging for dirt by the media. Nonprofit

executive compensation is an easy way for the me-

dia to find something to write about. Think about

recent scandals where nonprofit executives who are

CEOs of middle-of-the-road college football bowl

games are compensated at very high levels and the

ensuing scandals for these nonprofit organizations.

The Fiesta Bowl’s CEO was the subject of media

scrutiny and was fired and sentenced to eight

months in prison as a result of such a scandal.

What can you do about these issues? Two sug-

gestions from Venable LLP:

1. Stick to your mission. Make sure the com-

pensation of the nonprofit CEO is consistent with

the philosophy of your organization. Be aware of

this issue and be prepared to manage it by com-

municating effectively.

2. Have a written plan in place that explains

how compensation at the organization works and

provides justification for board members to use if

people are asked about pay at the organization.

For more information, go to http://goo.gl/as9rFe. ■

How does your compensation compare?

My salary: $ ____________________

Value of this year’s average salary: $119,131

Value of my fringe benets package: $ ____________________

Value of this year’s average fringe benets package: $19,431

Value of my bonus?

Value of this year’s average bonus: $5,021

My total compensation package? $ ____________________

Value of this year’s average total compensation package (including bonuses): $143,583 ■