Salary Surveys & Reasonable Compensation Tests: Fair Pay Without the Guesswork
Why Salary Surveys Matter for Nonprofits and Social Enterprises
If you’re running a nonprofit, B Corp, or social impact business, you already know that your mission is everything. But here’s a hard truth: Your mission can’t thrive if your team isn’t fairly compensated. We’ve all heard the phrase, “No money, no mission.”
A salary survey helps you:
Benchmark pay and benefits against similar organizations.
Stay competitive to attract and retain top talent.
Build trust and transparency within your team.
The big consulting firms charge an arm and a leg for this data, but it is possible to purchase independent reports and conduct a benchmarking survery yourself. If you’re going to conduct your own research, here’s where to start looking and a breakdown of the process:
Key Nonprofit Salary Benchmarking Resources
Candid (formerly GuideStar): Provides detailed, IRS-based compensation reports for executive and staff positions.
The NonProfit Times: Publishes annual salary surveys, offering data on base pay, bonuses, and turnover.
Idealist Nonprofit Salary Explorer: A crowdsourced tool for real-time data based on role, location, and organization size.
Economic Research Institute (ERI): Offers sector-specific and location-based salary data.
State Associations of Nonprofits: Often provides the most relevant, localized compensation reports for members (e.g., PANO, CalNonprofits).
Primary Considerations for Benchmarking
Use Comparable Data: Compare against organizations with similar operating budgets, staff sizes, and missions.
Rebuttable Presumption of Reasonableness: IRS Form 990 requires documentation of the process used to determine executive compensation to ensure it is not "excessive".
Internal Equity & External Market: Balance internal pay equity with the external market rate to attract and retain talent.
Total Rewards: Factor in benefits, remote work flexibility, and professional development in addition to base salary.
Steps to Conduct Benchmarking
Define Peers: Identify similar nonprofits (size, location, sector).
Gather Data: Use reputable sources like Guidestar or state association reports.
Analyze & Adjust: Review data to find percentiles and adjust for cost-of-living differences.
Create Salary Bands: Structure pay ranges to ensure consistency and transparency.
Document Process: Maintain records of the data and decisions, especially for executive roles, to stay compliant.
If that all sounds like a lot, well, it can be! Not to toot our own horn, but we’ve already invested in some of these tools and done a lot of the legwork to provide salary guidance for our clients (and our own team!), so we’d be happy to take that off your plate if your comp plan is due for an update.
Our foxtastic team delivers salary surveys tailored to your specific sector for a fraction of the cost of the big guys. No fluff, just actionable insights you can use to set fair pay practices.
Reasonable Compensation Tests for S-Corp Owners
If you’re an S-corp owner, you’ve probably heard the term reasonable compensation. But what does that actually mean?
It can get complicated, but here’s the basic run-down: The IRS requires S-Corporation shareholder-employees (AKA usually the paid owners) to pay themselves a reasonable salary (that is, a W-2 salary) before taking non-wage distributions. Reasonable pay is equivalent to what similar businesses pay for similar services, considering expertise, time spent on various tasks, and company revenue.
Get it wrong, and you could face:
IRS audits
State compliance audits
Back taxes and penalties
A whole lot of stress
As with salary surveys, you can do your own research and determine your own numbers. However, if you’d like the added peace of mind knowing your pay is fair and compliant according to IRS standards, we recently added Reasonable Compensation Tests to our list of services.
The Blue Fox Difference: Affordable, Sector-Specific Expertise
Here’s why our approach stands out:
Affordable & Accessible – We keep costs reasonable so smaller organizations don’t get priced out.
Sector-Specific Expertise – We understand nonprofits, B Corps, S-corps, and social enterprises.
Proactive Protection – Salary benchmarks and comp research helps avoid IRS issues, prevent staff turnover, and get ahead of problems before they start.
Ready to Stop Guessing About Pay?
Whether you want to make sure your staff salaries are competitive or confirm your own pay is IRS-approved, Blue Fox has your back.
👉 Explore our HR Consulting services and let’s build a compensation strategy that’s fair, compliant, and future-proof.
