Nonprofits must walk a fine line between keeping their operating expenses low andcompeting for qualified employees. When managing a nonprofit is an individual’s primary source of employment it is reasonable for the CEO to draw a salary. Nonprofits must balance the need to retain and promote the most talented managers while still maintaining their nonprofit status. However, when it comes to attracting talented leaders, offering competitive salaries can be a challenge for nonprofits. This is why GrantWatch has put together this article to help you understand how nonprofits can pay their CEOs while still qualifying as a 501(c)(3) nonprofit.
What Does a CEO Do?
Being the CEO of a nonprofit can be a very difficult position to navigate. This individual is responsible for the direction and future strategy of the organization. The CEO of a nonprofit assembles teams, outlines donor stewardship plans, and manages services and fundraising for the organization. Most CEOs should be familiar with every event that happens, even at the lower levels of the organization. They have to understand how these processes impact retention, community outreach, marketing, and budgeting for the organization. In addition, they must report the impact and performance of the organization to the board of directors as well as the general public. As you can see, being a nonprofit CEO is a time-consuming and labor-intensive position and is worthy of fair compensation.
How to Meet Nonprofit Salary Compliance?
There is no concrete rule for how the CEO of a nonprofit is paid, which can lead to confusion about salary requirements. The CEO or founder of a nonprofit often puts in long work hours. Yet, they typically make far less money than executives at for-profits. Although the truth is, nonprofit CEOs can pay themselves a fair salary for the work they do running the organization. While there is no clear answer as to how much you can pay your CEO, it’s generally a good idea to have your board of directors conduct an annual review. This is a good way to see if the salary you created is equivalent to other nonprofits that are similar in size and located in the same area. Keep in mind, that the IRS can and does penalize organizations that overpay the CEO or founder of a nonprofit.
What Is a Reasonable Compensation Package?
A nonprofit must be careful when determining competitive compensation packages to attract CEOs. The primary nonprofit compensation guideline is as follows: Wages paid must meet all local, state, and federal guidelines. In short, the package should be reasonable, fair, and not excessive. The compensation voted upon must include all benefits you want to offer. This might include an annual salary, medical benefits, paid time off, a pre-approved bonus structure, and more. The board voting on compensation packages annually ensures that vital funds are dedicated to the nonprofit’s overall mission. Compensating individuals to make a difference toward their mission is the key goal.
The Lastest Nonprofit Grants
- Firstly, grants are available to nonprofits, government agencies, IHEs, and tribes for joint research projects on humanities-related topics.
- Grants are also open to government agencies, nonprofits, NGOs, tribes, and IHEs to address nutrition and food access for low-income individuals.
- In addition, cooperative agreements are available for nonprofits, government agencies, tribes, and school districts for programs to reduce air pollution.
- Individuals and non-federal agencies can also for grants to promote the adoption and development of innovative approaches to conservation in agriculture.
- Lastly, funding is available to nonprofit organizations, government agencies, and tribes for programs and projects to reduce risks associated with natural disasters.
GrantNews Notes
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