Is your nonprofit paying its leaders fairly — with a clear record?

Under IRC 4958, nonprofit executive compensation is presumed reasonable — shifting the burden of proof to the IRS — when three conditions are met: it is approved in advance by an authorized body free of conflicts of interest, that body relies on appropriate comparability data, and the basis for the decision is documented concurrently in written or electronic records. PeerBasis supplies comparability data and a bracketed minutes worksheet for the board and its advisors to verify and complete.

Reasonable compensation is the amount that would ordinarily be paid for like services by like organizations under like circumstances — the IRC 4958 standard. PeerBasis builds a rule-based comparison from IRS Form 990 filings by selected reported role, NTEE sector, a disclosed filing-size band, and geographic tier. Positive total revenue is the ordinary size measure. When expenses are positive, revenue and gross receipts below 10% of expenses are treated as de minimis for the subject and candidates before the matcher falls back to expenses, then assets. The compensation measure is Form 990 Part VII column D plus column F; column F can include amounts from related organizations, while column E is excluded. If more than 2,000 candidates qualify, the output is capped at the 2,000 closest by the selected size measure and the full candidate count is disclosed.

To support the rebuttable presumption, written or electronic records — often board minutes — should document concurrently that an authorized body free of conflicts of interest approved the compensation in advance, relied on appropriate comparability data, and recorded the basis for its conclusion. A PeerBasis report includes a bracketed minutes worksheet organized around those requirements; the board and its advisors must verify and complete the decision-specific facts.

For an organization with under $1 million in annual gross receipts, 26 CFR 53.4958-6 contains a small-organization rule involving data on three comparable organizations. PeerBasis targets 15 and requires at least five qualifying peers for a downloadable board report. A thinner distribution may appear in the free preview, but checkout and PDF generation stay disabled.

Reported organization and compensation fields come from IRS Form 990 e-file returns, and sector classification (NTEE) comes from the IRS Business Master File. Each comparable links to its public filing. Where eligible reports derive normalized values, they separately identify the BEA Regional Price Parity and BLS CPI-U inputs used.

For the selected reported role and size-adaptive filing-size band, the selection ladder first tries the NTEE minor sector in the target state when both a minor NTEE code and state are present, then that minor sector nationwide, then the NTEE major group nationwide. The report identifies whether the size measure is total revenue, gross receipts, expenses, or assets. In nationwide tiers, 2024 BEA Regional Price Parity is applied as a regional price-level proxy only when both the target and peer state codes are supported; otherwise that adjustment is not applied to the row. Supported filing-year amounts are indexed to 2025 comparison dollars with CPI-U. The report states the selection tier, candidate count, selected peer count, and adjustment method.

No. A PeerBasis report is comparability data and supporting documentation to help a board make and record a good-faith determination under IRC 4958. It is not legal or tax advice; boards should consult their own counsel.

A Board Packet is $49 — and free when the disclosed filing-size measure is under $500k. That measure is positive total revenue by default; revenue and gross receipts below 10% of positive expenses are treated as de minimis before falling back to expenses or assets. At least five qualifying peers are required. The packet includes named comparables, percentiles, methodology, source citations, and a bracketed board-minutes worksheet for review and completion.