Article by Consuelo Lauda Kertz
Tax-exempt organizations create compensation packages for employees large enough to attract competent leadership but small enough to reassure donors that assets are not being misused. This Article analyzes executive compensation and other arrangements between exempt organizations and insiders. The Article discusses the parameters of “reasonable compensation” and the desirability of applying the for-profit “corporate reasonableness” standard in the nonprofit employment context. Analysis is made of recently enacted intermediate-sanctions legislation which deals with excessive compensation abuses and creates additional disclosure requirements for exempt organizations. The legislation imposes tax penalties on both the executives who improperly benefit and the entity managers who permit excessive compensation to be paid. The legislation also imposes new financial disclosure requirements on exempt organizations to improve public accountability.
About the Author
Consuelo Lauda Kertz. Professor, Emory University. J.D., Emory University; A.B., University of Chicago.
Citation
71 Tul. L. Rev. 819 (1997)