Page 111 - Washington Nonprofit Handbook 2018 Edition

y Where the transaction involves the payment of executive
compensation, the board or committee should obtain a
compensation survey that considers a variety of factors,
including geographic location, the size of the
organization, relevant experience, and comparability of
services. A special rule applies for organizations with
annual gross receipts of less than $1 million. In this case,
comparability data for compensation is appropriate if it
consists of compensation paid by three comparable
organizations in the same or similar communities for
similar services. Such data can be obtained through an

informal survey of similar organizations.

3) Adequate and Concurrent Written Documentation. The
board or committee must adequately and concurrently
document the basis for its decision in writing (e.g., through
minutes) For the documentation to be adequate, it must include
the terms of the transaction; the date it was approved; the
members of the board or committee who were present during
debate and those who voted on it; the comparability data
obtained and relied on, and how it was obtained; and member
of the board or committee member with a conflict of interest.
For the decision to be documented concurrently, the records

must be prepared by the next board or committee meeting or
60 days after the initial action, and must be approved within a
reasonable period.

CHAPTER 31. Political Activity

Federal tax law prohibits any 501(c)(3) organization from participating in any
political campaign on behalf of or in opposition to any candidate for public office.
This prohibition is absolute and any violation may result in loss of an organization’s
exempt status. The prohibited activity includes publishing or distributing written
statements or making oral statements on behalf of or in opposition to a candidate,
and paying salaries or expenses of campaign workers.

Section 501(c)(3) organizations must avoid any inadvertent violation of this
prohibition. For example, an organization should not invite a candidate to speak at
an organization-sponsored function during an election cycle, because this may be
treated as participation in a campaign. Organizations should also refrain from

WASHINGTON NONPROFIT HANDBOOK -100- 2018