Make no mistake about it: compensation of nonprofit executives is an important issue. Media coverage in Kentucky and around the nation might lead some to believe that the majority of nonprofit CEO’s are pulling in six figure salaries, driving luxury cars paid for by the nonprofit and traveling around the globe to promote missions of local organizations. You and I know this isn’t the norm, but unfortunately there has been just the right amount of coverage on these outliers to cause confusion and misunderstanding. And in all fairness, managing a multi-million dollar budget is not the same as managing a budget of $300,000.
The challenge is that nonprofit boards must walk a fine line. Boards want to hire the best, most capable person and this requires a competitive salary and benefits package. Professionalization of the nonprofit sector demands that compensation be commensurate with the skills and expectations required of the job. Boards must also be wise stewards of the organization’s resources. Bad press, lack of donor confidence and IRS penalties are just a few reasons that executive compensation must be handled carefully. So what’s a nonprofit to do? In a word: homework.
A recent article from the National Council of Nonprofits, as well as our new Principles & Practices tools can provide your organization with the guidance you need to comply with the IRS guidelines and create a package that fairly and competitively compensates the CEO.
Be a forward-thinking nonprofit! Develop the policies and practices that will identify capable leadership to ensure successful achievement of your organization’s mission.
Please comment below to share your thoughts on this important issue.