Nonprofit Pay May Face New Scrutiny

Anger over huge bonuses at American International Group and other Wall Street firms may carry over to the nonprofit world, as some tax-exempt organizations could face further scrutiny of their executive-compensation practices, The Wall Street Journal reports.

“The train of greater focus on nonprofit executive-compensation has left the station, and charity boards better get on, or they’re going to suffer greatly for noncompliance,” says Michael Peregrine, a partner at McDermott Will & Emery LLP, who advises nonprofits.

And as The Chronicle of Philanthropy reported in February, an Internal Revenue Service report about tax-exempt hospitals has triggered questions about compensation of all nonprofit executives and may embolden investigations by federal and state regulators who already are taking a hard look at how charities compensate their top officials.

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