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GuideStar Blog

From the President's Office, October 2004

Dear Friend:

Compensation is one of the key issues confronting nonprofit organizations today. Congress, donors, the media, and the IRS are all scrutinizing nonprofit salaries. Lists of "highest-paid nonprofit CEOs" abound.

Salary figures by themselves are meaningless, however. To gain true understanding of nonprofit compensation, we must add something else: context. We need to compare compensation practices among nonprofits of similar location, budget size, and mission.

That's why we're proud to announce the release of the 2004 GuideStar Nonprofit Compensation Report, a valuable tool for determining appropriate compensation. GuideStar's report remains the only nonprofit-compensation analysis derived entirely from IRS Form 990 and 990-EZ data. The 2004 edition is based on the 990s of more than 83,000 charities.

The GuideStar Nonprofit Compensation Report gives nonprofit leaders reliable, authoritative data on which to make salary decisions. The extra attention being paid to nonprofit compensation today makes this information more critical than ever.

Something else is necessary for understanding nonprofit compensation: transparency. Yes, 990 filers must report salaries and benefits to the IRS, but just reporting the figures is no longer enough for many organizations.

There's no doubt that most nonprofits are run by dedicated individuals who receive little or no compensation for their efforts. A few, however, require large budgets and complex operations to achieve their missions.

The leaders of these nonprofits must be prepared to disclose not only what their top employees earn but also why they earn it. Our colleagues have an obligation to define the challenges they face and the skills that are required to meet them. Only then can people inside and outside the sector determine if the salaries paid are appropriate for what employees do.

Nonprofit compensation is a critical issue for the nonprofit sector. Let's make sure the debate about it is well informed and based in fact.

Sincerely,

Bob Ottenhoff
President and CEO, GuideStar