GuideStar announces CEO compensation service

A new service from GuideStar.org, called the CEO Compensation Checkpoint, will help nonprofit boards to more easily set fair and reasonable compensation for their organization’s CEO. Ensuring that a CEO's compensation meets the Internal Revenue Service’s "fair and reasonable" standard is critically important for these reasons:

• In recent years, the IRS has levied millions of dollars in penalties for excessive compensation at tax-exempt organizations.

• The new Form 990 requires nonprofits to define their processes for establishing executive compensation, making these details public for all to see.
• The IRS has said that it will review compensation in every examination it performs on an exempt organization.

There's no formula to determine "fair and reasonable" – what meets the standard at one organization may be out of line at another. Establishing what is fair and reasonable now requires researching how much a CEO would earn at another nonprofit of the same size that has a similar mission or field of activity.

Launched in July, GuideStar CEO Compensation Checkpoint analyzes your CEO's compensation within a group of comparable nonprofits and delivers a customized, 10-page report, which is dated to create an audit trail should the IRS ever question the process your nonprofit used to establish your CEO's compensation.

The cost of the new service is $700. If there are insufficient data available on comparable nonprofits, the service will let you know and not invoice your organization. Click here to find out more or to order a report.