One of the chief responsibilities of a nonprofit board is to determine executive compensation, which involves navigating state and federal laws, organizational values, and competitive pay practices.
A board is responsible not just for setting executive pay but for doing so justifiably, which means considering internal, external, and stakeholder perceptions of compensation decisions.
To achieve reasonable and justifiable compensation, boards should conduct a robust investigation using comparability data, and monitor market conditions and executive expenses regularly.
Getting compensation right necessitates balancing objective factors like legal constraints and finances with subjective impacts on staff morale and stakeholder perceptions.
#nonprofit #executive-compensation #board-responsibilities #stakeholder-perception #legal-compliance
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