Nonprofit CEO pay not taken lightly
A recent report by the New Hampshire Center for Public Policy Studies examined compensation packages for our state's nonprofit hospital CEOs and provides a primer on IRS reporting and transparency requirements for nonprofit organizations.
Establishing the compensation package for a nonprofit executive is one of the most serious responsibilities of a nonprofit board, one which requires a very deliberate process.
Most people don't realize the high degree of transparency placed on nonprofits. Each year nonprofits must fill out an IRS 990, which requires significant data and documentation reflecting the organization's fiscal health, governance structure, adherence to conflict of interest requirements, compensation decision-making and mission delivery.
As part of their role, nonprofit citizen boards establish compensation packages for the executive leader, taking into serious consideration the responsibilities and competencies needed. Boards are required to make their decisions based on a documented annual performance review process, assessment of multiple marketplace reports and review of comparative salary ranges.
The perennial conversation about nonprofit salaries also opens the door for a broader community discussion on the complexity of today's nonprofit sector and the sweeping demands placed on charitable organizations.
Today's nonprofit organizations address a staggering array of complex issues, ranging from medical research to disaster relief, from public policy studies to the national challenge of obesity, from drug addiction to the essential care for our growing senior population. They also ensure the neighborhood food pantry and thrift store is in place, local land is preserved and historic sites and art museums open.
Thus, salaries for the top CEOs are highly variable depending on the scale and scope of their work.
It is imperative to our state's health and economy that the nonprofit sector, which employs one out of seven New Hampshire workers and contributes $9.1 billion to the state's economy while assisting thousands of families in gaining health and stability, is led by talented and appropriately compensated leaders. Through the recession, charitable gifts to nonprofit organizations have dropped 25 percent while government funding has been slashed by as much as 50 percent, while the need for assistance with shelter, food, workplace training and a wide range of healthcare services has more than tripled.
The nonprofit sector of the 21st century is a far cry from that of our great-grandparents' generation. If we are to sustain the health and well-being of New Hampshire people and communities, the need to recruit and retain innovative and visionary nonprofit leaders, supported by strong compensation, is essential.
(Mary Ellen Jackson is executive director of the New Hampshire Center for Nonprofits.)