Nonprofit Board Members – To Pay or Not to Pay in 2018?

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 8. May 2018 05:15
The vast majority of members of boards of directors in the nonprofit sector are not paid for their services. Board members typically serve on a part-time, voluntary basis, and many in the sector feel that they should not benefit personally from their service. While board members do fall under the IRS prohibition on “self-dealing,” there is an exception made for “payment of compensation ... for personal services,” which includes fees for board members. Payments, however, must be “reasonable and necessary to carry out the exempt purposes” and “not excessive.” So, compensation is permitted – but it cannot be “unreasonable” and “excessive.” [More]

Another Attempt at Mandatory Form 990 Electronic Filing

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 23. April 2018 10:32
The U.S. House Ways and Means Committee has released a discussion draft of a bipartisan bill that includes mandatory Form 990 e-filing. Sponsored by Oversight Subcommittee Chairman Lynn Jenkins (R-KS) and Ranking Member John Lewis (D-GA), this is part of a larger IRS reform effort. [More]

Tax Reform Hits Compensation of Nonprofit Executives in 2018

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 24. January 2018 12:21
Effective January 1, 2018, the Tax Cuts and Jobs Act, otherwise known as the Tax Reform bill, imposes a new 21% excise tax on nonprofits that pay compensation of $1 million or more to any of their five highest-paid employees. There will also be a tax on certain employee benefits. [More]

How Many Charity CEOs Will Earn $1 Million or More in 2018?

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 27. December 2017 12:26
A Wall Street Journal study published in March 2017 found that around 2,700 employees of 501(c)(3) nonprofits received annual compensation of more than $1 million in 2014. In 2011, a similar study found that about 2,000 were paid at this salary level, so the number increased about 30% over the three years. The number of employees receiving compensation in excess of $1 million will probably increase significantly in 2018. [More]

IRS Plan for Nonprofit Enforcement in 2018

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 16. October 2017 10:42
When the IRS issued its work plan for fiscal year (FY) 2018 in September, the nonprofit sector gained some insight into future enforcement and compliance activities. Yes, the IRS cites reduced resources and staff, but intends to step up the use of data analytics and computer analysis to increase the effectiveness of its efforts. The 16-page report, entitled "Tax Exempt and Government Entities FY 2018 Work Plan," indicates that there will continue to be focused attention on data, and the data used will be from the Form 990 filed annually by-tax exempt organizations. It is clear that what is reported on the Form 990 needs to be consistent and accurate. [More]

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