http://www2.guidestar.org/rxg/news/webinars/webinar-archive.aspx

1. How the GuideStar Compensation Report
Can Help You To Determine Appropriate
Executive Compensation
Chuck McLean
GuideStar Vice President of Research
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2. GuideStar Nonprofit Compensation
Report
• Uses IRS Form 990 compensation data
exclusively.
• Reports on both total compensation and
annual percentage increases for
incumbents.
• 2011 report includes 131,473 positions
drawn from 87,597 Form 990 filings of
501(c) organizations for fiscal year 2009
(other than private foundations).
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3. Positions Reported On
• CEO/Executive Director (82,845)
• Top Administrative Position (8,175)
• Top Business Position (2,090)
• Top Development Position (3,013)
• Top Education/Training Position (1,269)
• Top Facilities Position (431)
• Top Financial Position (19,426)
• Top Human Resources Position (1,734)
• Top Legal Position (1,191)
• Top Marketing Position (1,039)
• Top Operations Position (6,415)
• Top Program Position (2,272)
• Top Public Relations/Communications Position (715)
• Top Technology Position (1,558)
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4. Breakdown of Data
• Geography (National, State and MSA)
• Annual Expenses
• Gender
• Organization Type (NTEE Codes)
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5. Statistics Reported
• Number of organizations in the category
• The average compensation for the
position across the category
• The 10th, 25th, 50th (median), 75th, and
90th percentiles of compensation for the
position across the category
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6. Understanding the Statistics
• 10th percentile – 10 percent of the people reported
upon in the category made less than this amount,
and 90 percent made more.
• 25th percentile - 25 percent of the people reported
upon in the category made less than this amount,
and 75 percent made more.
• 50th percentile (median) - half of the people reported
upon in the category made less than this amount,
and half made more.
• 75th percentile - 75 percent of the people reported
upon in the category made less than this amount,
and 25 percent made more.
• 90th percentile - 90 percent of the people reported
upon in the category made less than this amount,
and 10 percent made more.
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7. Understanding the Statistics
• The larger the number of organizations in the
category, the more reliable the data. The
average compensation is especially
susceptible to being skewed when there are
few organizations in the category.
• The closer together the average
compensation and the median
compensation, the more reliable the data.
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13. In cases where a executive compensation
package is complicated and anticipated
total compensation is well above the
norm, The GuideStar Nonprofit
Compensation Report probably does not
provide sufficient information to satisfy
the requirements of a rebuttable
presumption. However, in most routine
cases, the report provides an adequate
“reality check” for setting executive
compensation.
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14. For example, suppose that your organization:
• Provides various human services
• Has an annual budget of $5.3 million
• Is located in Detroit, Michigan
• Is seeking an experienced executive director
Looking in the GuideStar report, you find 52 similar
organizations in Detroit, where executive director pay
was $125,536 at the 25th percentile, $151,571 at the
median, and $209,155 at the 75th percentile. It seems
reasonable, then, that target compensation would be
somewhere between the median and the 75th
percentile. If compensation is to be set significantly
higher than that, however, a more rigorous process is
likely required.
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15. Rules to Live By
• The best source of compensation data that
the IRS has is Form 990 data.
• The more the compensation of executives
strays above Form 990 norms, the more likely
the IRS is to question it, thus
• The more rigorous the organization needs to
be in following proper procedures and
documenting the reasons for what might
appear to excessively high compensation.
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16. Q&A
• What kind of compensation practices
can a for-profit engage in that a
nonprofit can’t?
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17. Q&A
• How has the economic downturn
affected compensation practices at
nonprofits?
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18. Q&A
• We are in a rural area and there are not
other nonprofits like us nearby. How
can we choose comparable
organizations for the purposes of
benchmarking compensation?
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19. Q&A
• Is it OK to pay bonuses, and what kinds
of limitations are there?
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20. Q&A
• How should compensation of board
members be determined?
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21. Q&A
• What are the advantages and
disadvantages of using Form 990 data
for comparable compensation
information?
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22. To download Karl Emerson’s
White Paper:
http://bit.ly/neu91Y
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23. If you have questions
• Karl Emerson, Montgomery McCracken
KEmerson@mmwr.com
• Chuck McLean, GuideStar
cmclean@guidestar.org
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