Let’s be honest — compensation is one of the trickiest parts of nonprofit leadership.

Pay too little, and you’ll lose great people.
Pay too much, and you’ll raise eyebrows (or worse, red flags with the IRS).

At The Batten Group, we believe fair, transparent compensation isn’t just about numbers — it’s about integrity, accountability, and attracting the best talent to serve your mission.

Here are four essential principles every nonprofit board and executive team should follow.

Running a large nonprofit is complex — and that complexity demands professional leadership. If you want exceptional talent, you need to pay fairly for it.

That’s where an independent Compensation Committee comes in.

Their role:

• Evaluate executive pay objectively.

• Ensure salary decisions align with market value.

• Keep your organization compliant with IRS standards and ethical guidelines.

The IRS requires disclosure of top executive compensation on Form 990. Having a committee in place shows transparency and helps prevent conflicts of interest when making hiring or raise decisions.

👉 Pro Tip: Independence equals credibility. Never let those benefiting from pay decisions drive the conversation.

This isn’t optional — it’s best practice.

The IRS expects nonprofits to determine “reasonable compensation” by comparing salaries with organizations of similar:

• Mission and size

• Operating budget

• Geographic region

If your board doesn’t already have a list of comparable organizations, build one now. It’s your best defense against scrutiny and your best tool for ensuring equity.

👉 Pro Tip: Look beyond base pay. Consider total compensation — including bonuses, deferred benefits, and retirement contributions — when benchmarking.

You didn’t start a nonprofit to drown in paperwork. You started it to make an impact. But when it comes to compensation, documentation is your friend.

Every decision — raises, bonuses, new hire packages — should be formally recorded. Why?

• It builds trust with staff, donors, and regulators.

• It protects your organization from compliance issues.

• It gives future boards a clear trail of rationale and data.

Nothing kills morale faster than ambiguity around pay. Clarity is the antidote.

👉 Pro Tip: Use a standardized form or digital approval workflow for all compensation-related decisions. Keep it consistent.

Yes, executive salaries in nonprofits can reach six figures — and that’s fine when the budget supports it.

But compensation must make sense in context. The organization’s annual expenses, fundraising capacity, and impact goals should all factor into what’s reasonable.

A $250,000 salary might be fair for a national health foundation — but excessive for a $1 million regional nonprofit.

👉 Pro Tip: Discuss compensation in the same breath as sustainability. Paying competitively means nothing if your organization can’t thrive long-term.

Compensation isn’t just a line item — it’s a statement of your organization’s values.

By building structure, benchmarking wisely, documenting decisions, and keeping financial realities front and center, you create an environment where leaders feel valued, teams feel respected, and donors feel confident.

That’s the foundation of healthy nonprofit leadership.

At The Batten Group, we believe the right leader can transform an entire organization.

We’re a national nonprofit executive search firm with more than 75 years of combined experience placing CEOs, development officers, and senior leaders across nonprofits, healthcare, higher education, and mission-based organizations.

Our work goes beyond résumés. We identify mission-driven, transformational leaders who align with your culture, inspire your teams, and drive long-term impact.

👉 Learn more at thebattengroup.com, follow us on LinkedIn and X, or subscribe to our newsletter for leadership insights and nonprofit career opportunities.

The Batten Group: where mission meets leadership.