New Law Limits Nonprofit Salaries

February 9, 2012 Posted by The Law Firm for Non-Profits, P.C. in News, Policy

Should there be a cap on nonprofit executive’s compensation? The Governor of New York thinks so.

A recent Executive Order limits the amount New York State will reimburse for executive compensation to $199,000 per year. According to Governor Cuomo, this is meant to reduce “excessive administrative costs and outsized compensation for [] senior executives.”

This conflicts with IRS standards and those in other states that permit nonprofit boards to pay their executives compensation that is fair and reasonable based on fair market standards and competitive job offers.

Look for the Executive Order to be challenged in court. Even so, we expect there will be continued support for limiting nonprofit salaries (e.g., members of Congress have suggested similar legislation be enacted).

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits,1812 W Burbank Blvd, #7445, Burbank, CA 91506

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