News and analysis
September 21, 2014

How The Chronicle Compiled Its Survey of Nonprofit Chief-Executive Compensation

The Chronicle’s annual report on executive compensation is based on data from charities that raise more than $25-million annually from private sources, as well as data from the largest foundations.

Most of the data are for calendar year 2012 and come from the IRS Form 990; where available, 2013 data from our survey are provided.

More than 400 organizations were asked to complete a survey requesting their latest compensation figures and provide their most recent informational tax forms, including sections where they are required by the IRS to disclose the compensation provided to their top officials.

For organizations that did not respond to the survey, The Chronicle sought to obtain the information through other sources, including directly from the IRS.

The IRS has different compensation reporting requirements for charities and foundations.

For charities, the IRS requires organizations to list all current officers, directors and trustees, "key" employees making at least $150,000, and the five highest-paid employees (other than directors and key employees) who make more than $100,000.

Charities must also report breakdowns of compensation for many of these employees.

Base compensation includes salary, sick pay, contributions to 401(k) and 403(b) plans, and health-plan contributions.

"Other compensation" includes bonuses, incentive pay, and nontaxable benefits.

"Other compensation" also includes severance payments, stock options and awards, forgiven loans, scholarships, legal services, and other forms of assistance. This can include compensation set aside in previous years and paid out in the current year.

Nontaxable benefits include health-plan premiums, flexible-spending accounts, and other such benefits.

The IRS also requires organizations to report "retirement and other deferred compensation," which includes any salaries, bonuses, stocks, or other compensation deferred until future years.

Because employees may be required to meet certain criteria before such compensation can be claimed, it is "at substantial risk of forfeiture." It can also gain or lose value before it is paid out. These figures, listed in the charts on the preceding pages as "deferred compensation set aside," are not included in the "total compensation" column.

Foundation Rules

Foundations are not required to report such breakdowns. Organizations must report to the IRS only the compensation of their officers, directors, trustees, and foundation managers. Furthermore, the IRS requires only compensation, contributions to employee benefit plans and deferred compensation, and expense accounts, plus other allowances to be reported.

The Chronicle reports the compensation, plus expense accounts and other allowances, as "total compensation." In some cases, chief executives did not serve in that capacity for the full calendar year. As a result, a single nonprofit may report the pay of two leaders.

The data for this survey were compiled by Anupama Narayanswamy and Sandhya Kambhampati.