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Nonprofit Law/executives compensation


We are considering establishing a nonprofit org for an educational and charitable benefits. Are there any guidelines/rules etc governing executive compensation?

I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations.  The IRS does not allow 501(c)(3) organizations to give someone more compensation than what  is reasonable. Starting on pdf page 10
of the IRS discusses many
of the factors it would look at to decide whether a salary is

The first factor is how many hours weekly the person is working
for the 501(c)(3) organization and then what the normal salary
would be for someone who is qualified for such a job in that area
of the country. In general, reasonable compensation is that amount
as would ordinarily be paid for like services by like enterprises
under like circumstances.

 If the executive is a member of the board then that person would not vote on the matter. Generally, under state law, the interested director should disclose to the Board the particular conflicts annually and before any vote and then should not vote in the matter, but I suggest you check your particular state's law as to the details.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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