How Much Can Your Salary Be if You Operate a Non-Profit Agency?

by Shelly Morgan

Exempt nonprofit agencies are regulated by the Internal Revenue Service and state law. Neither places a specific dollar value on nonprofit salaries. This lack of specificity does not mean you're entirely off the hook, though. The law requires that your salary be reasonable. Moreover, if you are highly compensated, your salary may be public information.

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Normal Compensation

The test for reasonableness is that the amount paid must be an amount equivalent to that which would be paid for like services by like organizations in like circumstances.

Highest Paid in Organization

Every year, a nonprofit must file a form 990 with the IRS. Section VII of the 990 requires disclosure of the compensation and names of officers, directors, trustees and key employees. Section VII also requires disclosure of the names and salaries five highest compensated people if those people make more than $100,000 per year.

Disclosure Remains on Books

Even if you no longer work for a nonprofit nonprofit, your name and salary may still be disclosed. The IRS requires disclosure of all former officers, key employees, and highest compensated employees who received more than $100,000 of reportable compensation.