Internal Controls and Exempt Organization Executive Compensation Arrangements

As nonprofit organizations become more entrepreneurial in carrying out their missions, they are facing many of the same challenges as for-profit organizations in designing compensation and benefit packages that effectively recruit and retain executive talent. While compensation issues at larger nonprofits tend to receive more scrutiny from the public and the IRS, the reality is that compensation policies are becoming more important for nonprofits of all sizes. The increased importance, size, and complexity of the compensation arrangements increase the risk of the organization's providing excess benefits.