I propose that my role as Adult General Circle Coordinator is a paid one. This will further Youth Power Coalition’s mission by ensuring that there’s consistency in general circle leadership and make organizing financially accessible for me. As I am also a Board Member, we need to have a discussion within the mission circle meeting to discuss a compensation policy.
There is no federal law that prohibits nonprofits from compensating their board members but some states may forbid compensation for board service. It is a common practice to consider board service a volunteer service. Most boards do not provide regular compensation for their members.
If a board decides to allow compensation for its members, it needs to proceed carefully in order not to betray the public trust. Board members are not expected to benefit personally from their affiliation with the organization but, at the same time, they should not suffer financially from their service.
The IRS considers ‘reasonable’ compensation acceptable. What is reasonable is not clearly defined but following IRS’ safe harbor mechanisms can protect the board from stepping out of line:
- Rely on outside counseling
- Research practices in similar local organizations
- Document the findings
From the NY State Office FAQ on Governance
The board of directors must approve the compensation of officers by the affirmative vote of a majority of the entire board, unless the corporation’s by-laws provide that it may be approved by a committee of the board. A charity is authorized to pay reasonable compensation commensurate with the services performed. While there is no set process which boards must follow in approving compensation, the best practice is for compensation to be determined by an authorized body, such as a compensation committee, composed entirely of people who are impartial and do not have a financial stake in the outcome. The authorized body should obtain and rely on information as to comparability of the officer’s salary to salaries paid to officers in similar positions at comparable charities, and the authorized body should document the process and basis for its determination. Compensation includes all forms of benefit provided by corporation, not just salary, and the board should be sure to look at the officer’s entire compensation package. The Internal Revenue Service encourages charities to follow the procedures set out in section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6. They are described generally on the IRS website at www.irs.gov/pub/irs-tege/governance_practices.pdf
Form 990 Asks
Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?
The Internal Revenue Service encourages a charity to rely on the rebuttable presumption test of section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6 when determining compensation of its executives. Under this test, compensation payments are presumed to be reasonable if the compensation arrangement is approved in advance by an authorized body composed entirely of individuals who do not have a conflict of interest with respect to the arrangement, the authorized body obtained and relied upon appropriate data as to comparability prior to making its determination, and the authorized body adequately documented the basis for its determination concurrently with making the determination.
Comparability data generally involves looking to compensation levels paid by similarly situated organizations for functionally comparable positions. One method is to obtain compensation surveys or studies from outside compensation consultants for this purpose. The Internal Revenue Service will look to the independence of any compensation consultant used, and the quality of any study, survey, or other data, used to establish executive compensation. Once that test is met, the Internal Revenue Service may rebut the presumption that an amount of compensation is reasonable only if it develops sufficient contrary evidence to rebut the probative value of the comparability data relied upon by the authorized governing body.
A voting member of the Board of Directors or an Officer who receives compensation directly or indirectly from the Corporation for services or a Director serving as a voting member of any Committee whose jurisdiction includes compensation matters is precluded from voting or acting on matters pertaining to that Director’s or Officer’s compensation.
However, a voting member of the Board or any Committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Corporation, either individually or collectively, may upon request of the Board or Committee provide information regarding compensation.
- I’m thinking a policy like up to this amount per hour in whichever circle is consented to given that I would also be working on Leadership Development
Our field (non-profits / organizing) has patterns of inequitable compensation. Here’s feedback from the idea of having a full-time adult executive director:
Would suggest exploring a strategy where youth trainers (leaders) fundraise to give each recipient of training some financial capital to start projects. Bit confusing that the organization is not committed to a centralized leadership model but wants to empower the ED with a full time salary, but compelling story about the sacrifices made in the non profit sector with uncompensated labor.
Worry here about the ability of this venture to appropriately scale with this kind of model. If it is really youth-led, then it also goes to reason that a young person leading the org as co-executive director should receive compensation so the labor of young people in this venture is not extractive
Average base pay is $73,251 in New York City for an organization of 0-50 people with 10-14 years of experience.
In my situation living in New York City as 2 adults, 1 working, no children, the living wage is $30.20.
The living wage shown is the hourly rate that an individual in a household must earn to support his or herself and their family. The assumption is the sole provider is working full-time (2080 hours per year). The tool provides information for individuals, and households with one or two working adults and zero to three children. In the case of households with two working adults, all values are per working adult, single or in a family unless otherwise noted.
The living wage model does not include funds that cover what many may consider as necessities enjoyed by many Americans. The tool does not include funds for pre-prepared meals or those eaten in restaurants. We do not add funds for entertainment, nor do we incorporate leisure time for unpaid vacations or holidays. Lastly, the calculated living wage does not provide a financial means to enable savings and investment or for the purchase of capital assets (e.g., provisions for retirement or home purchases). The living wage is the minimum income standard that, if met, draws a very fine line between the financial independence of the working poor and the need to seek out public assistance or suffer consistent and severe housing and food insecurity. In light of this fact, the living wage is perhaps better defined as a minimum subsistence wage for persons living in the United States.
What the policy says:
- Circles that approve or fill a role set the pay rate.
- The policy includes a whole list of considerations to make sure pay is equitable and needs-based, takes into account as much of the whole situation as possible (like living costs in the country etc).
What the policy is trying to accomplish
- Give autonomy to circles
- Give basic guidance to circles to create a more open and transparent conversation around pay
What we’ve seen in practice
- There is a tendency to see $15 as the “base” rate. The policy itself doesn’t say that. Should it? And what does that mean? That it’s the most common one? Or the minimum rate?
- The policy has not been requesting to write a rationale (stated reasons) for a rate higher than $15. In the role template that Staffing Circle has been using (which you can find if you start a google doc from a template, or here ), it now prompts to add a rationale. The idea here is to make sure a basic record is kept of the discussion so others who weren’t present can have some insight why the choices were made.
Total: 25 hours/week
- Advocacy co-coordinator: 2.5 hours/week
- Leadership development member (will increase): 2 hours/week
- Finance: 8 hours/week
- Fundraising: 5 hours/week
- General Circle co-coordinator
- General Circle: 2.5 hours/week
- Outreach Partnerships: 1 hour/week
- Mission Circle: 0.5 hours/week
- Internal Comms: 2 hours/week
- External Comms: 0.5 hours
- Camelback Ventures: 1 hour/week
Core Fund: $8,613.67
- Source is 50% of all unrestricted funds including individual donations, unrestricted grants, and consulting revenue from projects minus payment to consultants. Currently funded primarily by grants (variable) as opposed to recurring donations (consistent)
- Allocated to fixed expenses that keep Youth Power Coalition functioning as an organization
- Implications: TBD what “core” expenses are. Perhaps this fund’s expenses include general circle coordinator compensation. Perhaps these also include website, QuickBooks, etc. fees.
Operations Fund: $4,776.83
- Source is 34% of all unrestricted funds including individual donations, unrestricted grants, and consulting revenue from projects minus payment to consultants
- Allocated to anything that doesn’t fall into the other funds - is often one-off (for example, bluetooth airpods for Deborah to be able to do calls and record videos, food for events, etc.)
- Implications: Perhaps this fund’s expenses include compensation for one-off projects as needed
Movement Training Fund: $19,485
- Source is $22,000 from The Rising Foundation
- Allocated to the Movement Training Project (for example, compensation to project coordinators and speakers)
- Implications: Perhaps time spent directly on this project is compensated and decided by the leadership development circle
Adhoc Consulting Projects: Variable
- Source is clients like Camelback Ventures and Hester Street Collaborative and payment can be per hour or per project
- Allocated to general unrestricted funds minus expenses such as paying consultants who complete the work
- Implications: Perhaps we need a general consulting project agreement, such as 20% of all consulting project fees go towards the coalition while the rest is collaboratively distributed by consent of the consulting team (including Deborah when applicable) up to a certain dollar amount per hour