At 01:01 PM 03/20/2003 -0500, Ben Marshall wrote:
>Just wondering generally if a non-profit status precludes the Board of
>Directors of a museum from increasing the salaries of key personnel if
>revenue targets are met?


This question actually touches on two different points: (1) IRS rules on
excessive compensation and (2) commission-based compensation (for
fundraising.)

(1) Most museums won't run afoul of the IRS rule (IRC 4958) about excess
compensation for the simple reason that most museum staff are paid amounts
lower than that which would trigger IRS attention.  A $150K salary (don't
we wish? ;) is well within industry norms.  A salary of $750K, though,
needs to be justified as not falling under the provisions of IRC 4958.

For more information about IRS regulations on non-profit salaries, see
http://www.irs.gov/pub/irs-tege/m4958a2.pdf

and

http://www.irs.gov/pub/irs-tege/eotopice03.pdf

(2)  You were not really asking about commissions or contingency-based
compensation, I know, but it is a related topic.  You are asking about
performance-based bonuses, which are perfectly legal and increasingly
becoming acceptable even in non-profits.  Paying a commission on the basis
of a gift, though, is unethical according to the tenets of AFP.

For good background material about unusual compensation in non-profits, see

The Chronicle of Philanthropy, in particular:

http://philanthropy.com/premium/articles/v13/i24/24004301.htm


The Right Price
Charities turn to controversial pay deals to lure top talent
By Michael Anft

(you may need to be a subscriber to access that link, but it is the issue
dated October 4, 2001.)






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