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Salary/Wages for Nonprofit Employees (Rebuttable Presumption)



Rebuttable Presumption (not an excess benefit transaction): In general, payments under a compensation arrangement are presumed to be reasonable, and a transfer of property, or the right to use property, is presumed to be at fair market value, if the following conditions are satisfied:


  1. The compensation arrangement or the terms of the property transfer are approved in advance by an authorized body of individuals who do not have a conflict of interest with respect to the compensation arrangement or property transfer.

  2. The authorized body obtained and relied upon appropriate data as to comparability prior to making its determination. The authorized body should research the average pay per position for nonprofit according to their overall budget

  3. The authorized body adequately documented the basis for its determination concurrently with making that determination, along with those who are involved.

Above is a “safe” estimate on how the budget “can be” distributed.


  • Do you feel the above percentages are fair? Remember nonprofit, is just that, nonprofit. If you are in hopes of making a “HUGE” profit, maybe this route is NOT for you?

  • If you don’t agree with the percentages, what percentage do you feel is appropriate?

  • Do you think a person should have a stable source of income before pursuing a nonprofit and why?

  • What are your thoughts?


If you would like to learn more about this topic, please feel free to take “Is Starting a Business Right for You?” Workshop.

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