Rules For Accountability And Faith-Based Organizations

Concern regarding misuse of charitable funds and the desire of elected officials to give the appearance of protecting the common good have combined to create pressures on nonprofit leaders to provide accountability, especially in the area of compensation.

This has been true of religious organizations as much as any other. In response, the Commission on Accountability and Policy for Religious Organizations, sponsored by the Evangelical Council for Financial Accountability, issued “Enhancing Accountability for the Religious and Broader Nonprofit Sector.”

“Enhancing Accountability” offers six recommendations for religious and charitable organizations. They are:

  • Regardless of the provisions of the Internal Revenue Code (IRC) and related regulations, the governing bodies of nonprofit organizations should ensure that the compensation (including benefits) paid to leaders is clearly reasonable under the circumstances.
  • Nonprofit organizations should adopt appropriately robust policies that provide clear and practical guidance for establishing reasonable compensation for leaders, properly address conflicts of interest and guide them in avoiding making excess benefit transactions.
  • When a nonprofit engages a compensation consultant to assist in obtaining appropriate data as to comparability for executive compensation, the members of the body should exercise prudence and diligence that the data is for similarly situated organizations.
  • Nonprofits should require that total compensation of their top paid leader is disclosed to or approved by the governing body of the organization.
  • One or more independent organizations should conduct compensation surveys of the largest exempt religious organizations.

Exempt religious organizations should actively participate in appropriately managed salary surveys.