How Nonprofit Organizations Earn Money
Nonprofits receive funding from donations, grants, individuals, corporations, or government to better its community by facilitating programs. To qualify, the entity must serve the public, meet filing requirements, establish as a 501(c)(3), and avoid certain activities.
Operational Structure of Nonprofit Organizations
Nonprofits have a board overseeing activities and teams of employees and volunteers doing the work. They aim to benefit society, not individuals or shareholders. They rely on donations by individuals, corporations, or foundations. A board may oversee compliance with standards. Staff or volunteers do daily operations.
Compensation in Nonprofit Organizations
The average nonprofit CEO salary is $182,783. Nonprofit founders can pay themselves a fair salary for their work and compensate employees. So founders earn money for running their organizations. IRS expects reasonable compensation compared to similar organizations. Excessive pay can penalize both individuals and organizations. But “excessive” is relative, with no amount across-the-board.
The compensation structure varies based on budget and industry standards. The board determines the CEO’s compensation, considering experience, responsibilities, and financial health. CEOs of large hospitals and health systems earn at least $900k per year. The people running nonprofits can receive taxable salaries.