Despite occasional stories of excessive compensation paid to foundation staff and trustees, research shows that the vast majority of foundations operate with volunteer boards and without paid staff. The Foundation Center reports that less than one-fifth of all foundations with assets of over $1 million have paid staff, and research by the Council on Foundations shows more than three-quarters of the foundations that responded to their annual survey indicated that they do not offer their trustee payment of any kind.

The standard for determining both executive and trustee compensation is that it must be considered “reasonable.” Excise tax penalties may be levied by the IRS on organizations if compensation paid to high-level employees or board members of charitable organizations is found to be “unreasonable” or “excessive.”

While it is impossible to strictly define what constitutes excessive compensation, it is generally agreed that comparing similar positions in similar organizations provides a fair guideline. There are several studies available on foundation staff and trustee compensation that can be used to benchmark salaries and compensation. The Council on Foundations conducts an annual salary and benefits survey of community, private and public foundations, as well as corporate grantmakers. With participating organizations representing over 45% of foundation assets in the U.S., the Council’s salary report is the most comprehensive data available on compensation paid to philanthropy professionals. The Association of Small Foundation and the Foundation Center also gather information on foundation staffing and trustee compensation.

ADDITIONAL RESOURCES:

*NEW* -
"Foundation Expenses and Compensation: How Operating Characteristics Influence Spending"
issued by the Urban Institute, the Foundation Center, and GuideStar, this report documents the dimensions of foundation expenses and the impact of different operating styles.