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Executive Compensation Overview:
Developing and managing executive compensation within a not-for-profit organization are complex tasks that require significant oversight of the board of directors. The importance of conducting thorough, independent research is critical in developing executive compensation programs in not-for-profit organizations that address both regulatory requirements and good governance practices.
The programs and methodology utilized by Compensations Resources, Inc. (CRI) meet intermediate sanctions requirements and industry best practices, while providing the justification and supporting documentation called for in the rebuttable presumption requirements.
Challenges Not-for-Profit Organizations Face Relative to Executive Compensation:
- Multiple Layers of Punitive Regulations – These include IRC Section 4958 on intermediate sanctions and IRC Section 4941 relative to self-dealing, IRC Sections 457(b) and (f) relative to deferred compensation, and IRC Form 990 requirements. These are in addition to the typical employment and compensation-related regulations, as well as accounting and tax rules already in place covering for-profit businesses. Furthermore, many states are considering or have instituted regulations of their own with respect to limits on executive compensation for not-for-profit executives, such as New York State Executive Order 38.
- The Visibility of the Not-for-Profit Organization and the Perception by Many Different Stakeholders, including the Public, Legislators and Media – There is a long-held belief that compensation in not-for-profits should be below market. Often, there is a lack of understanding by the public of the need of not-for-profits to compete with for-profit companies within the competitive labor market for talent, the intricacies of the compensation arrangements, and the overall depth of expertise and responsibility required by executives of not-for-profits.
- The Difficulty and Uncertainty of Funding – Most organizations have to work within their budgets; however, NFPs have an ongoing uncertainty because of the source of their funds and the restrictions imposed on how they can be used for compensation purposes.
CRI has extensive experience working with NFP boards and executive management to develop creative and successful compensation programs that help to attract, retain and reward executives for their achievement of key operational business objectives.
Staff Compensation Overview:
Many not-for-profit organizations recognize the need to attract and retain qualified talent through highly effective staff compensation programs. Market competitiveness is important not only at the executive level but also throughout the organization. CRI supports not-for-profit organizations in the design and development of various staff compensation and related human resources initiatives, including:
- Competitive Market Studies
- Job Description Development
- FLSA Reviews
- Salary Structure Designs
- Performance Management Programs
- Salary Administration Policies and procedures
In addition, CRI produces an annual Compensation Survey of Not-For-Profit Organizations designed to capture executive and staff compensation data of positions within a broad range of not-for-profit classifications.
We are available to answer any questions you may have and to provide the necessary support to your organization. Please call us or contact:
Mary Rizzuti, CCP, PHR, SHRM-CP
Diana Neelman, CCP