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Alternatives to pay raises in nonprofit executive compensation was among the topics discussed this year at the Georgetown University Law Center’s annual “Representing and Managing Tax-Exempt Organizations” conference, last week at the Renaissance Hotel in Washington.
In addition to briefings from the IRS and Congress, the more than 300 participants could choose to attend 25 break-out sessions on topics that included updates to 990s, changes to nonprofit campaign finance law, and changes in healthcare law and organizations.
Executive compensation was discussed in many of the sessions. In “Current Developments in Executive Compensation,” the speakers laid how to prepare a compensation plan and how to protect yourself from the IRS. Presenter Charles Quatt walked participants through recent developments in compensation plans.
“Incentive compensation is increasing rapidly among nonprofit organizations, taking the place of raises,” Quatt said, referencing a recent survey of more than 700 nonprofits. One of the most common pitfalls in compensation planning, he said, is what the IRS defines as the marketplace for a given compensation plan. And, most important, “no one should have a compensation plan that can’t be defended.” Always protect one’s self and your board by establishing a compensation procedure, placing caps on all plans, and ensure than no plan takes away from the ability of the organization to provide any services or benefits.
In “Election Year Topics for 501(c) Organizations” Rosemary Fei and Elizabeth Kingsley discussed how 501(c) organizations need to monitor any rulings or challenges to Citizens United. Because campaign financing is scrutinized by the press and other watchdog groups, this year it is “especially important that associations know what activities are and aren’t permissible.”
In the same session, Gregory Colvin discussed various pending constitutional amendments that might affect associations ability to give to campaigns. While many of the bills are not likely to pass, Colvin said associations need to watch Congress, “in particular all versions of the DISCLOSE Act, which is currently pending in both the House and Senate and would causes major changes with how organizations disclose and track their campaign finance activities.” He added that during election years it is especially important to remain in compliance with all potential laws and new regulations.