Nonprofit executive compensation remains a critical governance challenge requiring strategic balance between competitive market rates, donor expectations, and mission alignment. This comprehensive analysis examines best practices for establishing transparent, defensible compensation packages including cash and non-cash components, stakeholder management, salary survey methodologies, and regulatory compliance. Key focus areas include IRS intermediate sanctions, state attorney general oversight, board governance structures, and performance measurement frameworks. Organizations must navigate complex tensions between attracting qualified leadership and maintaining public trust while ensuring compliance with federal tax-exempt requirements and state charitable solicitation laws.

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