Nonprofit Executive Incentive Pay

69 Pages Posted: 2 Aug 2018

See all articles by Steven Balsam

Steven Balsam

Temple University - Department of Accounting

Erica Harris

Villanova University

Multiple version iconThere are 2 versions of this paper

Date Written: July 13, 2018

Abstract

We utilize information only recently disclosed on Form 990 to examine the use, and consequences of, incentive pay at nonprofit organizations. Bonuses are common in nonprofits, as we observe that approximately 45 percent of the forty-four thousand organization-year observations in our sample reported paying CEO bonuses. We find that the bonuses are positively associated with profitability, competition from other nonprofits, firm size, available cash, and use of compensation consultants and committees; while negatively related to board oversight, donations, and grants. Our results also suggest that donors look unfavorably at the payment of bonuses, i.e., bonuses are associated with lower future donations. Nonetheless, we find evidence consistent with the payment of bonuses incentivizing nonprofit executives as, despite reduced fundraising, future profitability and program services are positively associated with current bonus compensation.

Keywords: nonprofit, incentive pay

Suggested Citation

Balsam, Steven and Harris, Erica, Nonprofit Executive Incentive Pay (July 13, 2018). Available at SSRN: https://ssrn.com/abstract=3213375 or http://dx.doi.org/10.2139/ssrn.3213375

Steven Balsam

Temple University - Department of Accounting ( email )

306 Speakman Hall
Philadelphia, PA 19122
United States
215-204-5574 (Phone)
215-204-5587 (Fax)

HOME PAGE: http://www.sbm.temple.edu/~drb/

Erica Harris (Contact Author)

Villanova University ( email )

Villanova, PA 19085
United States

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