logo
  • Nonprofit News
  • Management
    • Boards and Governance
    • Communication
      • Framing & Narratives
    • Ethics
    • Financial Management
    • Fund Development
    • Leadership
    • Technology
  • Philanthropy
    • Corporate Social Responsibility
    • Donor-Advised Funds
    • Foundations
    • Impact Investing
    • Research
    • Workplace Giving
  • Policy
    • Education
    • Healthcare
    • Housing
    • Government
    • Taxes
  • Economic Justice
    • Economy Remix
    • Economy Webinars
    • Community Benefits
    • Economic Democracy
    • Environmental Justice
    • Fair Finance
    • Housing Rights
    • Land Justice
    • Poor People’s Rights
    • Tax Fairness
  • Racial Equity
  • Social Movements
    • Community Development
    • Community Organizing
    • Culture Change
    • Education
    • Environment
    • Gender Equality
    • Immigrant Rights
    • Indigenous Rights
    • Labor
    • LGBTQ+
    • Racial Justice
    • Youth Activism
  • About Us
  • Log in
  • CONTENT TYPES
  • Webinars
    • Leading Edge Membership
    • Sponsored Webinars
    • Economic Justice
  • Tiny Spark Podcast
  • Magazine
    • Magazine
    • Leading Edge Membership
Donate
Executive Compensation

That Excise Tax on High Nonprofit Salaries: Now’s When the Innovation Happens

Ruth McCambridge
February 8, 2018
Share30
Tweet19
Share44
Email
93 Shares
Photo: Calita Kabir

February 7, 2018; HealthLeaders Media and the Wall Street Journal

Around 2,700 nonprofit employees were paid more than $1 million in 2014, and you can bet most of them were in the “eds and meds.” (In fact, 78 of them were college football coaches, with salaries ranging up to $11 million.) HealthLeaders Media reports that around 16 percent of all US nonprofit hospitals will, as a result of the tax overhaul, be required to pay an excise tax on up to five annual salaries higher than $1 million.

The Wall Street Journal reports that there are approximately 400 nonprofit hospital organizations in that group, and many are scrambling to limit their liability by doing everything from restructuring benefits packages to vest deferred compensation packages earlier to restructuring the payroll systems so that they all fall under one nonprofit umbrella. Since the excise tax is only assessed on a maximum of the five highest paid employees of any single nonprofit, consolidation would keep the salaries of additional employees also making over a million dollars from being subject to the excise tax.

For instance, the 59-hospital system of Michigan’s Trinity Health now has 40 separate nonprofit entities, leaving 15 employees eligible; on the other hand, Banner Health in Phoenix, with only one umbrella nonprofit, will need to pay a tax on only five of an approximate 11 employees making more than $1 million.

At the University of Pennsylvania, there are 16 salaries in excess of $1 million, but the salaries of only three executives and two medical academics will be taxed. University president Amy Guttman made more than $3 million in 2015.

“Congress is putting nonprofits in the same position as for-profit entities when it comes to compensating employees,” says tax lawyer Jonathan Sambur, but the corporations have found various ways to evade the taxation.—Ruth McCambridge

Share30
Tweet19
Share44
Email
93 Shares

About The Author
Ruth McCambridge

Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.

Related
Jewish Nonprofit Employees Decide They Too Want Radical Salary Transparency
By Steve Dubb
November 21, 2019
What to Consider when the Nonprofit CEO Compensation Is Wrong
By Benjamin Martinez
October 23, 2019
When Setting Nonprofit Compensation, Don’t Do This…or This
By Ruth McCambridge
September 26, 2019
Heads Up! Nonprofits and the New Federal Overtime Rule
By Ruth McCambridge
September 25, 2019
A Nonprofit Cash Cow Effort Goes Belly Up
By Rob Meiksins
September 24, 2019
Got Milk? Maybe Not, but These Milk Execs Got Plenty of Cash
By Rob Meiksins
September 9, 2019
other posts by The Author
Houston Police Chief Blames NRA-Compliant Senators for...
By Ruth McCambridge
December 10, 2019
Speculations on the Roots of the Loss of Small US Donors:...
By Ruth McCambridge
December 6, 2019
Houston United Way in its Own Crunch Does “Critical...
By Ruth McCambridge
December 6, 2019
A Series on Sensemaking Organizations
The Sensemaking Organization: Designing for Complexity
The Sensemaking Mindset: Improvisation over Strategy
Structuring for Sensemaking: The Power of Small Segments
logo
Donate
  • About
  • Contact
  • Newsletters
  • Write for NPQ
  • Advertise
  • Writers
  • Funders
  • Copyright Policy
  • Privacy Policy

Subscribe to View Webinars

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by GDPR plugin
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.