How to Read Executive Pay on Form 990 Part VII and Schedule J

When you open a nonprofit’s Form 990, your own or a peer’s, the executive pay is in Part VII, which lists the officers, directors, key employees and highest-paid staff with what they were paid. For the larger packages, Schedule J breaks the pay down further.

The figures take some care to read. Each person’s pay is split across three columns that measure different things, so comparing one organization’s salary column with another’s total can make one look far more generous than it is. This page walks through Part VII and Schedule J with a made-up example, then explains how to compare one organization’s figures with another’s.

Which return

Start by checking which return you have, because not every nonprofit files the full Form 990. An organization files it when its gross receipts are $200,000 or more, or its total assets are $500,000 or more at the end of the year. Below both lines it may file the shorter Form 990-EZ, which lists officers and their pay in its own Part IV. An organization whose gross receipts are normally $50,000 or less may instead submit the Form 990-N postcard, which reports no pay at all (Form 990 instructions).

The return is due on the 15th day of the fifth month after the organization’s year ends, which is May 15 for a calendar-year filer, though an automatic extension is available on Form 8868. That’s one reason filings usually appear 12 to 24 months after the year they cover. You can find them in free online lookups and in the IRS’s own e-file data, or ask the organization, which must make each return available for three years from the later of its due date (with extensions) or the date it was filed (IRS, public disclosure of exempt organization returns).

Who is listed

Part VII, Section A lists the organization’s people in order of total pay, highest first. Whether someone appears depends on their reportable compensation from the organization and related organizations, so a Form 990 shows salaries only for the people who meet these thresholds (Form 990 instructions).

• Current officers, directors and trustees, whatever they are paid, including unpaid board members.
• Current key employees paid more than $150,000.
• The five highest-paid other employees paid more than $100,000.
• Former officers, key employees and highest-paid employees paid more than $100,000, if they were listed in any of the previous five years (with extra rules for former highest-paid employees).
• Former directors and trustees paid more than $10,000 for their past service on the board.

The organization’s top management official, usually the executive director, president or CEO, is treated as an officer whatever the title, and so is its top financial official, usually the treasurer or CFO. Because current officers are listed whatever they’re paid, the executive director appears in Part VII however modest the salary.

A key employee is someone other than an officer, director or trustee who passes three tests in order.

1. They are paid more than $150,000 in reportable compensation.
2. They have influence over the organization like an officer’s, run a part of it that is at least 10% of its activities, assets, income or expenses, or control at least 10% of its capital spending, operating budget or pay.
3. They are among the 20 highest-paid people who pass the first two tests.

The six columns

Each person gets one row, read across six columns.

The figures are for the calendar year that ends with or within the organization’s tax year. For an organization whose year ends June 30, that means the previous January to December, so a raise given in the spring may not show yet.

Column E may leave out a related organization that paid the person less than $10,000. Column F counts deferred compensation in the year it is earned, whether or not it is vested or paid. Adding D, E and F gives the person’s total compensation, which is the figure the list is sorted by, while Column D alone is the salary and bonus the organization itself paid.

A sample row

This made-up row is for Dana Ruiz, executive director of a community health center.

Her total is $160,800, which is over $150,000, so the health center must also break her pay down on Schedule J.

Schedule J

Schedule J is filed for anyone listed in Part VII whose reportable and other compensation, Columns D, E and F together, is more than $150,000. It is also filed for every former officer, key employee or highest-paid employee listed, for former directors paid more than $10,000 for past board service, and for anyone paid by an unrelated organization for services to the filer (Form 990 instructions).

In Part I, line 1a asks about perks such as first-class travel, travel for companions, tax gross-ups, housing, club dues and personal services. Line 3 asks how the organization set its top executive’s pay, with boxes for a compensation committee, an independent compensation consultant, the Form 990s of other organizations, a written employment contract, a compensation survey or study, and approval by the board or compensation committee. Later lines ask about severance and change-of-control payments, pay tied to revenue or net earnings, and other non-fixed payments such as discretionary bonuses (Schedule J instructions).

Part II splits each person’s pay into its parts, on one line for the organization and another for related organizations.

On the organization’s line, the three parts of Column B add up to the person’s Column D in Part VII, which for Dana Ruiz is $130,000 plus $12,500, or $142,500. Her full breakdown adds back to the $160,800 total. On the related organizations’ line, the parts add up to Column E, plus any small amounts from a related organization that Part VII was allowed to leave out.

Part VI, line 15

For how the pay was set, look back at Part VI, line 15. Line 15a asks whether the process for setting the top executive’s pay included approval by people without a conflict, comparability data, and contemporaneous documentation, and line 15b asks the same about other officers and key employees. When the answer is yes, Schedule O describes the process and gives the year it was last done, which tells you how old the pay study is (Form 990 instructions). Those three elements mirror the requirements of the rebuttable presumption of reasonableness.

Comparing organizations

Use the same column for every organization you compare. If you collect figures from more than one source, check which measure each uses, because totals read higher than Column D. Organizations that file the short Form 990-EZ report pay on a different line, close to but not the same as Column D.

Titles in Column A are free text, so match people by the job they actually do rather than by title. The filings are self-reported and signed under penalty of perjury, but errors do occur.

If you use PeerSet, every figure is Column D, as its methodology explains, and it maps the free-text titles to 13 standard roles before it compares anyone.

Informational only. Not legal, tax or compensation advice. No guarantee of accuracy.