Comments on: How to Pay Your Nonprofit’s Staff http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/ Wed, 08 Feb 2012 00:41:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Greg McRay http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-13132 Greg McRay Fri, 27 Jan 2012 05:53:36 +0000 http://501c3.org/blog/?p=671#comment-13132 Great questions, Corey. The answer is "maybe"...the devil is in the details on this one. In order to qualify for ministerial tax status, the significant majority of your job function would have to be ministerial in nature. It's possible, but a much more narrow window than what you had as pastor. Since this has substantial impact on your finances, you may wish to contact us for a paid tax consultation. It's critical to get this right. Great questions, Corey. The answer is “maybe”…the devil is in the details on this one. In order to qualify for ministerial tax status, the significant majority of your job function would have to be ministerial in nature. It’s possible, but a much more narrow window than what you had as pastor. Since this has substantial impact on your finances, you may wish to contact us for a paid tax consultation. It’s critical to get this right.

]]> By: corey http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-13084 corey Wed, 25 Jan 2012 16:54:11 +0000 http://501c3.org/blog/?p=671#comment-13084 Hi Greg, I am the executive director of a new faith-based 501(c)3 nonprofit. Prior to this, I was a pastor. My denomination has allowed me to maintain my ministerial license as I am serving in what the consider to be a ministry capacity, though the organization is unaffiliated with the denomination. I am wondering if my salary can be structured to include a housing allowance as ministers serving in churches can. Additionally, I have opted out of social security under the ministerial exception. Would my salary in this capacity be required to pay social security taxes or would this still fall under the exempt category? Thanks! Hi Greg,

I am the executive director of a new faith-based 501(c)3 nonprofit. Prior to this, I was a pastor. My denomination has allowed me to maintain my ministerial license as I am serving in what the consider to be a ministry capacity, though the organization is unaffiliated with the denomination.

I am wondering if my salary can be structured to include a housing allowance as ministers serving in churches can. Additionally, I have opted out of social security under the ministerial exception. Would my salary in this capacity be required to pay social security taxes or would this still fall under the exempt category?

Thanks!

]]> By: Greg McRay http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-12399 Greg McRay Wed, 11 Jan 2012 00:48:27 +0000 http://501c3.org/blog/?p=671#comment-12399 You're always on thinner ice when payroll makes up that much of a nonprofit's budget. That being said, this can often happen in small service-based NPOs. Make sure the contract is in writing and that the ED has no role in determining compensation. All HR decisions regarding his employment should be with his recusal. You’re always on thinner ice when payroll makes up that much of a nonprofit’s budget. That being said, this can often happen in small service-based NPOs. Make sure the contract is in writing and that the ED has no role in determining compensation. All HR decisions regarding his employment should be with his recusal.

]]> By: Greg McRay http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-12394 Greg McRay Wed, 11 Jan 2012 00:35:19 +0000 http://501c3.org/blog/?p=671#comment-12394 My friend, I wouldn't worry about sounding greedy. It sounds like you are being taken advantage of and they are happy to oblige your silence. By saying "exempt" employee, I assume you mean exempt from OT rules. I'm not an expert in all-things-HR, but I know there are a number of strategies to being paid OT if your on-call time actually results in you having to go to work. I gotta say, if this is your first vacation in 4 years, your services are taken for granted, not valued. Big difference. My friend, I wouldn’t worry about sounding greedy. It sounds like you are being taken advantage of and they are happy to oblige your silence. By saying “exempt” employee, I assume you mean exempt from OT rules. I’m not an expert in all-things-HR, but I know there are a number of strategies to being paid OT if your on-call time actually results in you having to go to work. I gotta say, if this is your first vacation in 4 years, your services are taken for granted, not valued. Big difference.

]]> By: Greg McRay http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-12390 Greg McRay Wed, 11 Jan 2012 00:13:41 +0000 http://501c3.org/blog/?p=671#comment-12390 Great question. It is OK for a board member to also be a paid employee, but it is not a best practice due to the conflict of interest. If it is absolutely necessary, make sure all compensation decisions are made by the non-employed board members. It is NOT OK to be paid for your service as a board member. I have to say, though, that the administrative duties that come with being VP is part of the gig. You shouldn't expect to get paid for it. As someone who sits on 3 boards right now, I understand the time it takes as a volunteer...it just goes with the territory. If the administrative duties you mention are really that of a staff member and not part of the VP role, then a paid staff position may be appropriate. I highly recommend checking out our <a href="http://www.501c3.org/501c3-university/" title="501(c)(3) University" rel="nofollow">501(c)(3) University</a> webinar series. There are several sessions on boards and governance that would be very helpful to you. Great question. It is OK for a board member to also be a paid employee, but it is not a best practice due to the conflict of interest. If it is absolutely necessary, make sure all compensation decisions are made by the non-employed board members. It is NOT OK to be paid for your service as a board member. I have to say, though, that the administrative duties that come with being VP is part of the gig. You shouldn’t expect to get paid for it. As someone who sits on 3 boards right now, I understand the time it takes as a volunteer…it just goes with the territory. If the administrative duties you mention are really that of a staff member and not part of the VP role, then a paid staff position may be appropriate.

I highly recommend checking out our 501(c)(3) University webinar series. There are several sessions on boards and governance that would be very helpful to you.

]]> By: Sherrie C http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-12373 Sherrie C Tue, 10 Jan 2012 20:56:40 +0000 http://501c3.org/blog/?p=671#comment-12373 I am one of several incorporators forming a 501c3 not for profit corporation in partnership as an Advisory Team with our neighborhood community center for the benefit of the public (youth, parents and seniors). Is is lawful to hire staff in these types of organizations or hire any of the incorporators as paid staff? I am currently taking on many administrative tasks as V.P. and wanted to know if I could receive a reasonable compensation (although this is not a great issue--I enjoy what I do)? I am l looking forward to your reply back. I am one of several incorporators forming a 501c3 not for profit corporation in partnership as an Advisory Team with our neighborhood community center for the benefit of the public (youth, parents and seniors). Is is lawful to hire staff in these types of organizations or hire any of the incorporators as paid staff? I am currently taking on many administrative tasks as V.P. and wanted to know if I could receive a reasonable compensation (although this is not a great issue–I enjoy what I do)? I am l looking forward to your reply back.

]]> By: Dustin http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-11058 Dustin Wed, 04 Jan 2012 20:33:52 +0000 http://501c3.org/blog/?p=671#comment-11058 I am currently paid as a salaried exempt employee, though I should be a non-exempt. I am often times working over 40 a week, sometimes close to 60. I am taking my first vacation in 4 years and they are trying to decide if I "deserve" to get a check. I love this place and I don't want to ruffle any feathers but I also feel slighted about them considering to not pay me. I suppose I am interested in advise on how to approach them about their payroll practices withough coming across as greedy. That being said, if we do make the switch to non-exempt how does one get paid for on-call services? I am currently paid as a salaried exempt employee, though I should be a non-exempt. I am often times working over 40 a week, sometimes close to 60. I am taking my first vacation in 4 years and they are trying to decide if I “deserve” to get a check. I love this place and I don’t want to ruffle any feathers but I also feel slighted about them considering to not pay me. I suppose I am interested in advise on how to approach them about their payroll practices withough coming across as greedy. That being said, if we do make the switch to non-exempt how does one get paid for on-call services?

]]> By: Keith http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-7388 Keith Thu, 22 Dec 2011 07:25:05 +0000 http://501c3.org/blog/?p=671#comment-7388 Many of my questions about compensation and serving the dual role have been answered by previous inquiries above, however, is there a certain point to where an NPO (501(c)(3) specifically) must have sufficient funds to pay a salary to an employee? Obviously there would need to be enough funds to cover a salary, but is there a point to where it is not legal? For instance, if an NPO raised $80k annually, could the E.D. legally make $60k if a majority of the NPO's work is service based (if that even matters), or is there something preventing NPO's from using a majority of their funds towards salaries? Additionally, if the E.D. is also a board member, does there need to be a written contract formed by the majority Board members or is a verbal contract ok? Many of my questions about compensation and serving the dual role have been answered by previous inquiries above, however, is there a certain point to where an NPO (501(c)(3) specifically) must have sufficient funds to pay a salary to an employee? Obviously there would need to be enough funds to cover a salary, but is there a point to where it is not legal? For instance, if an NPO raised $80k annually, could the E.D. legally make $60k if a majority of the NPO’s work is service based (if that even matters), or is there something preventing NPO’s from using a majority of their funds towards salaries? Additionally, if the E.D. is also a board member, does there need to be a written contract formed by the majority Board members or is a verbal contract ok?

]]> By: Greg McRay http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-5934 Greg McRay Fri, 16 Dec 2011 21:26:57 +0000 http://501c3.org/blog/?p=671#comment-5934 Not sure I understand the question, but if you've been paid by the organization for services rendered, it should be considered payroll as of the date paid. Hope that helps. Not sure I understand the question, but if you’ve been paid by the organization for services rendered, it should be considered payroll as of the date paid. Hope that helps.

]]> By: Valerie Webb http://www.501c3.org/blog/how-to-pay-your-nonprofits-staff/#comment-5278 Valerie Webb Wed, 14 Dec 2011 00:38:30 +0000 http://501c3.org/blog/?p=671#comment-5278 I am getting ready to go onto payroll as of 1/1/12. Would it be acceptable to just start my payroll start date a few weeks early and run it through payroll now? Or, would the IRS look at that as just a way to get around the cash gift giving. By the way, it's $200 and was given to me in cash. I am getting ready to go onto payroll as of 1/1/12. Would it be acceptable to just start my payroll start date a few weeks early and run it through payroll now? Or, would the IRS look at that as just a way to get around the cash gift giving. By the way, it’s $200 and was given to me in cash.

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