FAQ

Executive Directors need to be aware of their work performance and be given an annual review. This is one of the primary duties of a nonprofit board, and it is one that gets overlooked too often.

• Reviews are an opportunity to provide positive feedback to the Executive Director.

• A review shows the Executive Director that the Board is connecting to the organization’s operations.

• Each board member should offer input into a performance review. A CEO Evaluation provides an efficient process of gathering this input, allowing the focus to be on relevant aspects of the leader’s performance.

• Self-administered evaluation surveys can be tricky.

• Saddling board members with the task of developing, distributing and compiling an evaluation is an inefficient use of board members’ time, usually causing one or two board members to expend an extraordinary amount of time and effort on a task that NPCEOEvaluation can do better and quicker for less of an investment.

• Human beings are sensitive to relationships, and a new member might be overly deferential to the views of the leaders.

• It is common for those who move into Executive Committee positions on a board to have warm relationships with the CEO, and that may cause other members to doubt that their voices will be fully heard unless they agree.

• NPCEOEvaluation will compile a body of data in response to the standardized portions of the survey, and the NPCEOEvaluation report will place responses into a more helpful context. By seeing whether a given score is above or below the mean and median for other organizations, board members and CEOs can assess whether change in that area deserves attention in the coming year.

The salary comparison is important for two reasons. First, you do not want a good CEO to be tempted away to another organization willing to offer a more fair salary. Second, a salary comparison offers entrance into protection from an IRS finding that the CEO’s salary is unreasonable. The IRS Code § 4958 prohibits the payment of excessive compensation or other benefits to nonprofit CEOs or Executive Directors. As a result, any board members, who knowingly participates in an excess benefit transaction may be subject to a 10% tax on the excess benefit, up to $20,000. Board members who "go along" with a proposed CEO salary that turns out to be excessive are putting their own savings on the line. There is, however, a SAFE HARBOR that creates a "rebuttable presumption" of reasonableness if: 1) the salary is approved before it is paid by a board or committee comprised of those who have no conflict of interest with respect to the transaction; 2) the board or committee obtains and relies on “appropriate data” about comparability of the compensation prior to making its determination; and 3) the  board or committee documents the basis for its determination “concurrently” with the making of that determination. 

When a nonprofit organization informs us that they have decided to use the NPCEOEvaluation service, we will contact the Board Chair, the CEO, the HR Committee Chair or whomever the organization designates. NPCEOEvaluation will schedule a call with the appropriate person or persons, and begin customizing the survey tool to fit the circumstances of the organization, and identifying organization specific issues to be covered. When the survey is customized (usually1-3 days after the initial contact), NPCEOEvaluations will distribute the survey to the board members, requesting a response within a week. Reminders will be sent until all board members return the surveys, or until 2 weeks have passed, whichever comes first. If, after 2 weeks, 100% of the board has not responded, NPCEOEvaluation will contact the designated contact with the names of the non-responders and encourage telephone contact. The designated contact will make the final decision when to move forward with compiling the results.

NPCEOEvaluation will produce a report compiling all the data from the survey responses, along with comments provided and contextual commentary reflecting the experience of NPCEOEvaluation. If the organization has used NPCEOEvaluation in the past, a comparison to previous results will be included, highlighting changes and progress.

Frankly, probably not. A first year member of the board who has attended two meetings probably has less knowledge and fewer insights than a member of the executive committee who has served for 5 years. Many questions in our survey include a related scale to attempt to quantify the confidence of the respondent, and the scoring reflects that confidence level.

Rather than relying on Salary Surveys that are based on voluntary responses from organizations of widely differing size, location, and complexity, the NPCEOEvaluation process relies on the actual 990 forms filed with the IRS reporting executive salaries. The organizations are compared by budget size, National Taxonomy of Exempt Entities (NTEE) code, location and other factors. Unlike most other services, NPCEOEvaluation will specifically identify at least 5 organizations in the comparison, and provide a salary range appropriate for the organization’s CEO. The process is designed to give the organization and its board the benefit of the safe harbor of presumptive reasonableness.

Of course you can. Organizations have been self-administering evaluation surveys and setting salaries for CEOs for generations without the help of NPCEOEvaluation. NPCEOEvaluation offers a new, easier and vastly improved method of accomplishing this task, but the old way remains an option.

No. Copying our survey is a violation of copyright law, and one of the principles of copyright law is that we need to protect our copyright for it to remain valid. BUT, if you sincerely need help with your evaluation process, please reach out to us and let's discuss what we can do. We are nonprofit professionals with a deep love of the nonprofit sector, and we would much rather help you somehow than litigate against you!

None! CEO Evaluation and Compensation are the only services offered by NPCEOEvaluation. There are outstanding consultants out there who can help a CEO develop skills or address issues identified in the evaluation process. NPCEOEvaluation does not to identify issues and then “upsell” the organization on further services. If asked, NPCEOEvaluation can suggest appropriate consulting services to address issues, but NPCEOEvaluation will keep its focus evaluation surveys and salary studies.