Do Nonprofits Have to Report Salaries?
Understand nonprofit salary reporting requirements and how public access to this data ensures financial accountability and trust.
Nonprofit organizations are entrusted with public resources to fulfill their charitable missions. This unique position necessitates financial transparency, fostering public trust and accountability. A key aspect of this transparency is the public disclosure of salaries, providing insight into an organization’s financial stewardship.
General Reporting Obligations
Nonprofit organizations must meet specific reporting obligations to the Internal Revenue Service (IRS). This reporting ensures compliance with federal tax law and promotes public oversight. The primary mechanism for this financial disclosure is the IRS Form 990 series, an annual information return detailing an organization’s revenue, expenses, assets, and activities.
The specific version of Form 990 an organization must file depends on its financial size and type. Nonprofits with gross receipts typically $50,000 or less may file the simpler Form 990-N, an electronic postcard. Organizations with gross receipts less than $200,000 and total assets less than $500,000 generally file Form 990-EZ, a shorter version. Larger organizations, or those with gross receipts of $200,000 or more or total assets of $500,000 or more, are required to file the comprehensive Form 990. Private foundations, regardless of their financial size, must file Form 990-PF.
Annual filings are a condition of maintaining tax-exempt status. Failure to file a required return by the due date can result in penalties. Continued failure to file for three consecutive years can lead to automatic revocation of tax-exempt status, requiring the organization to pay corporate income taxes and potentially losing its ability to receive tax-deductible donations.
Specific Compensation Disclosures
Nonprofit organizations must provide detailed compensation information for certain individuals on their annual Form 990. This disclosure is found in Part VII, Section A, of the Form 990. Individuals whose compensation must be reported include current officers, directors, trustees, key employees, and the five highest compensated employees.
Officers are individuals elected or appointed to manage the organization’s daily operations, such as a president or treasurer. Directors and trustees are members of the organization’s governing body who possess voting rights. All officers, directors, and trustees who served during the reporting period must be listed, regardless of compensation.
A “key employee” is defined by the IRS based on a three-part test: they receive reportable compensation exceeding $150,000, have significant responsibilities or influence over the organization similar to officers or directors, and are among the top 20 highest compensated employees meeting these criteria. The “highest compensated employees” refers to the five employees (other than officers, directors, trustees, or key employees) whose reportable compensation from the organization and related organizations exceeded $100,000 for the calendar year ending within the organization’s tax year.
Reported compensation types are comprehensive, including base salary, bonuses, and incentive compensation. It also encompasses deferred compensation and other reportable benefits like health insurance, retirement plan contributions, and fringe benefits. Form 990 requires a breakdown of this compensation, distinguishing between amounts paid directly by the organization and those received from related organizations.
Finding Reported Compensation Information
Information reported on Form 990 is publicly accessible. This accessibility is important for nonprofit transparency and accountability to donors and the public. The IRS mandates that these forms be made available for public inspection.
Several methods exist for accessing a nonprofit’s Form 990. The IRS offers its Tax Exempt Organization Search (TEOS) tool, allowing users to find information about an organization’s tax-exempt status and view its tax filings.
Beyond the IRS, several independent online databases compile and present Form 990 data in user-friendly formats. Prominent platforms include GuideStar, part of Candid, and ProPublica’s Nonprofit Explorer. These resources allow users to search for organizations, view summaries of their financial data, and access the full Form 990 documents.
Individuals can also request a copy of a nonprofit’s Form 990 directly from the organization. Nonprofits are required to provide copies of their three most recent Forms 990 upon request. A reasonable fee may be charged for copying and postage.