Do-It-Yourself Compensation Analysis: The New, Improved GuideStar CEO Compensation Checkpoint Report

Last year, we introduced CEO Compensation Checkpoint Report, a customized report that analyzed CEO compensation at a specific nonprofit within a group of comparable organizations. This year, we've made the report even more flexible and put the power in the user's hands. You can now use National Taxonomy of Exempt Entities (NTEE) codes or location to identify peer organizations that best align with your organization's mission and programs.

We've also automated what was for us a manual process, enabling you to generate the report on demand and making it possible for us to lower the price of this service. Previously $700 per report, CEO Compensation Checkpoint Report is now $500 per organization analyzed. A 30-day post-purchase guarantee allows you to generate up to six different versions of the report for the Employer Identification Number (EIN) for which it was originally was purchased.

Why It Matters

We've said it before, but it bears repeating: Nonprofits need to ensure that the salaries and benefits they pay their executives meet the IRS's definition of "fair and reasonable." That definition varies from nonprofit to nonprofit; to determine what is "fair and reasonable" for a position at a specific organization, you must research what people in comparable jobs earn at nonprofits that are of similar size and that have similar missions and programs.

If the IRS finds that executives at an exempt organization have been overpaid, it can fine both the executives and the board members who approved the overpayment, or even revoke the organization's tax-exempt status unless the board (1) based its decision on appropriate research and (2) documented its decision-making process at the time it approved the compensation.

GuideStar CEO Compensation Checkpoint Report takes care of the IRS's first requirement. A proprietary algorithm draws on GuideStar's rich nonprofit compensation data to create peer comparisons and statistical analysis for total revenue, chief executive total compensation, and percent change in incumbent chief executive total compensation. A date- and time-stamped report documents your research.

Don't Get Caught Short

In March 2007, the IRS reported that it had levied $21 million in excise tax assessments for excessive compensation at tax-exempt organizations. Today, the IRS continues to look at executive compensation in every examination (i.e., audit) it performs on a tax-exempt organization. Protect your organization; use GuideStar CEO Compensation Checkpoint Report to define fair and reasonable CEO compensation for your organization.

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Suzanne E. Coffman, November 2010
© 2010, GuideStar USA, Inc.

Suzanne Coffman is GuideStar's editorial director and editor of the GuideStar Newsletter.