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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13314
Experience:  15years with H & R Block. Divisional leader, Instructor
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What is considered a reasonable salary CEO with a non profit

Customer Question

what is considered a reasonable salary for a CEO with a non profit organization
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

The IRS only advises that compensation is reasonable if the amount paid would ordinarily be paid for:

  • comparable services
  • by comparable enterprises (whether nonprofit or for profit), and
  • under comparable circumstances.

In other words, you have to look at what other people doing similar jobs for similar organizations are paid.

In Newark, New Jersey the median salary for a Chief Executive Officer is $688,453 with a range usually between $523,390-$854,316 according to salary.com

It depends on how large the non profit though. You can look at salaries in many NJ cities here
http://www1.salary.com/NJ/Chief-Executive-Officer-salary.html

In determining whether another nonprofit (or profit) organization is comparable to your own, you should consider whether it is similar in:

  • size—by budget, revenues, number of employees, and persons served, and
  • mission—for example, a small private school should not be compared to a hospital or performing arts group.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.

Expert:  Robin D. replied 1 year ago.

Please advise if you need more information or rating in a positive way is acceptable.

Customer: replied 1 year ago.
I asked for a CEO compensation specifically with a non profit organization
Expert:  Robin D. replied 1 year ago.

There is no specific amount that would apply across the board for a non profit. The same amounts would apply for non profit or profit CEO.

You have to look at what a person would be paid as a CEO in the same city for a company or organization that is the same size as your org.

Expert:  Robin D. replied 1 year ago.

It also depends on how much money the non profit is bringing in.

Customer: replied 1 year ago.
The organization's revenue is $570,000 per annum
Expert:  Robin D. replied 1 year ago.

U.S. federal law (Prop. Regs. Sec. 53.4958-4) notes that nonprofits should pay "reasonable compensation," defined as "an amount as would ordinarily be paid for like services by like enterprises under like circumstances."

A median salary of $75,000 for nonprofits with budgets between $1 million and $2.5 million would be reasonable, but your operating budget would determine how much could be spent on salary.

You can look up organizations in your community with which you are familiar to see the salaries of their key employees.

http://www.charitynavigator.org/index.cfm?bay=studies.ceo#.Vjo9-NKrSt8

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