Nonprofit executive incentive pay

Steven Balsam () and Erica E. Harris ()
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Steven Balsam: Temple University
Erica E. Harris: Villanova University

Review of Accounting Studies, 2018, vol. 23, issue 4, No 12, 1665-1714

Abstract: 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% of the 44,000 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; that is, 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; Executive compensation; Incentive compensation; Determinants of executive incentive compensation in nonprofits; Consequences of executive incentive compensation in nonprofits (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11142-018-9473-z

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