Responding to the growing calls that certain American nonprofits were abusing their priviledges, in 2007 the IRS released a short 4-page article titled "Good Governance Practices for 501(c)(3) Organizations" (see "Related Downloads" below). In this document the IRS unequivocally stated, "Charities should generally not compensate persons for service on the board
of directors." If that is true, why are two of the Big 3 testing companies paying hundreds of thousands of dollars every year to their directors in flagrant violation of this "Unpaid Directors" rule?
|
Governing Board Member Compensation
(Average Annual Compensation)
The Big 3 vs. the Top Five U.S. Non-Profits
|
 |
Americas Five Largest Non-Profits |
| Non-Profit |
Revenue
(million) |
Number of Directors |
Number Compensated |
Average Annual Compensation |
|
| Mayo Clinic |
$6,898 |
28 |
4 |
$510 |
|
| YMCAs of America |
$6,050 |
46 |
0 |
$0 |
|
| United Way |
$4,370 |
18 |
0 |
$0 |
|
| Salvation Army |
$4,156 |
4 |
0 |
$0 |
|
| Red Cross |
$3,155 |
47 |
0 |
$0 |
|
AVERAGE |
$4,925 Billion |
28.6 |
0.8 |
$100 |
|
|
"Big 3" Testing Companies |
| |
Revenue
(million) |
Number of Directors |
Number Compensated |
Average Annual Compensation |
Compared to Industry Average of $100 |
| ETS |
$880 |
16 |
16 |
$32,688 |
Exceeds by 328 times |
| ACT Inc |
$237 |
15 |
14 |
$32,600 |
Exceeds by 327 times |
| College Board |
$583 |
31 |
0 |
0 |
Below (follows IRS recommendation) |
AVERAGE |
$566 |
62 |
30 |
$16,323 |
Exceeds by 164 times |
Note: Facts and figures are based on tax filings (IRS Form 990) and company statements for 2007, the most recent records available. Some figures are subject to slight rounding error.
ETS is paying its Trustees well over half a million dollars a year - there are trustees being paid between $600 and $800 per hour.
ACT Inc is paying its Board of Directors a total of $489 thousand a year - an average of $32,600 per Director. (To his credit, Mr. Carl A Cohn stands as the sole Director that does not accept compensation from ACT.)
College Board follows IRS recommendations and does not compensate any of its Directors. Like those at other nonprofit organizations, College Board's Directors contribute their time freely to what they believe is a good cause. In terms of Director compensation, College Board is doing nothing wrong.
• IRS "Good Governance Practices for 501(c)(3) Organizations" (2007)
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