Vermont Legislator Calls for $166K Salary Cap for State-Backed Nonprofits

December 19, 2017; Burlington Free Press

If any nonprofit board does not yet understand that their high-end salaries are likely to come under scrutiny and have the potential to be held up for public review, they’re governing in the wrong decade. Even as the Tax Cuts and Jobs Act makes its way through Congress, complete with a provision to tax high nonprofit salaries, Vermont State Sen. Christopher Pearson has proposed a bill which would mandate that no nonprofit receiving more than $1 million in state funding could pay an employee more than what the governor makes—approximately $166,000—without getting a state waiver.

Is this an attack on nonprofits? Not according to Pearson, who says he hopes to encourage board members to think differently about compensation packages and income inequality.

“Our nonprofits are vital partners to the state. I’m not trying to attack nonprofits across the board,” Pearson says. “I am saying that Vermonters deserve to see the pay scale that our tax dollars support and ask the question of whether or not that’s working.”

“A lot of state dollars end up going to our nonprofit partners,” says Pearson. “Whether it’s mental health providers or hospital CEOs, there are several instances where essentially taxpayers are helping to fund organizations that pay their directors huge amounts of money. And I think it’s important to shine a light on that.”

The provision would not affect most of the state’s nonprofits, since the average Vermont nonprofit executive director earns just over $83,000 annually.—Ruth McCambridge