Today Candid published the 2019 GuideStar Nonprofit Compensation Report, the 19th edition in this annual series. The report remains the only large-scale examination of nonprofit executive compensation based entirely on IRS data. This year’s report analyzes FY 2017 compensation data on 162,853 individual positions at 113,549 nonprofits as well as incumbent compensation data for 106,252 positions at 79,910 nonprofits.
Major findings from the 2019 report include:
- Compensation for nonprofit CEOs increased modestly in 2017, especially compared to the previous two years.
With one exception, median compensation increases for incumbent CEOs were lower in 2017 than 2016 and 2015. The exception was for men at organizations with budgets of $250,000 or less, who saw no increase in 2016 and a 1.3 percent increase in 2017. In 2015, however, this same group experienced a 4.4 percent increase.
Median Increase in Incumbent CEO Compensation by Gender, 2014-2017
2014-2015 2015-2016 2016-2017 Budget Size Females Males Females Males Females Males $250 thousand or less 4.2% 4.4% 1.3% 0.0% 0.3% 1.3% $250 thousand-$500 thousand 4.3% 4.7% 2.5% 1.6% 0.7% 1.0% $500 thousand-$1 million 4.0% 3.8% 2.8% 2.3% 0.9% 0.9% $1 million-$2.5 million 3.3% 3.6% 2.9% 2.5% 1.2% 1.6% $2.5 million-$5 million 3.5% 3.2% 3.1% 2.9% 1.0% 2.0% $5 million-$10 million 3.0% 2.8% 3.3% 3.2% 1.0% 2.1% $10 million-$25 million 2.9% 2.4% 3.9% 3.4% 1.0% 2.0% $25 million-$50 million 2.5% 2.0% 4.3% 4.4% 3.1% 0.1% Greater than $50 million 1.5% 0.4% 4.0% 4.2% 0.2% 0.1%
- Increases by gender also varied from previous years.
In 2015, women saw greater increases than men in six of nine budget bands. In 2016, women they experienced greater increases than men in seven budget bands. In 2017, men received greater increases in six budget bands.
- Median compensation of female nonprofit CEOs continued to lag behind that of their male counterparts.
The gap has narrowed over the years. In 2017, it ranged from 5 percent at organizations with budgets of $250 thousand or less to 20 percent at organizations with budgets of greater than $50 million.
- The percentage of women leading organizations in any budget category grew only slightly between 2016 and 2017.
These figures have increased since 2005, however.
- Cause area affected compensation.
Science and health organizations had the highest overall median salaries. Religion and animal-related organizations brought up the rear.
Why it matters
If the IRS finds that a nonprofit has overpaid its executives, it can impose fines on both the executive(s) who received the overpayment and the board members who approved it. A nonprofit’s board can prevent this outcome by taking three steps:
- Approving compensation in advance. The board must also ensure that no one who participates in the decision has a conflict of interest concerning the transaction.
- Basing its decision on comparability data obtained before the compensation is approved.
- Documenting the decision-making process at the time it approves the compensation.
The 2019 GuideStar Nonprofit Compensation Report fulfills the requirement in step 2.
Nonprofits, particularly charities that rely on contributions, must also be able to defend their compensation practices to the public. As the IRS observed in a 2009 study on nonprofit hospital compensation, “For some, there may be a disconnect between what, as members of the public, they might consider reasonable, and what is permitted under the tax law.” Having reliable comparative data on hand can be the difference between maintaining or losing the public’s trust in your organization.