Attached.

Running Head: PRESUMPTION AND REASONABLENESS

Presumption of reasonableness
Institutional affiliation
Date

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PRESUMPTION AND REASONABLENESS

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Introduction
The nonprofit executive is to be ideally compensated because of the important and beneficial
work they do though most of them still stick on the idea of being conservative on making
payment for their executives and this often happens due to insufficient funds. The low
compensation rates can be associated with the board members on the concerns on staying
compliant to trusts that are charitable and tax that may lead to penalties for the approval of
excessive compensations. The act of offering excess compensations is a type of private
inurement that may lead to a revocation of the tax exempt status for an organization. Under other
occasions, it might be a type of excessive earning that benefit private individual in the
organization and thus limiting it from achieving its set goals. To private organizations, the act of
excessive compensations can be self-dealing instead and hence subjecting the organization to
more penalty taxes.
Elements that establish the presumption of reasonableness for a non-for profit organization
The three main elements responsible for the establishment of a reasonableness of a nonprofit
organization are: The arrangement to carry out the compensations should be done in advance by
the board in control or by a committee meant for the event without creating a skirmish of
interest. There must be special and specific procedures created to be used mainly during the
compensation act and arrangements in addition to the complying interest and requirements. The
board is supposed to comply with the following procedures and requirements: The terms of
carrying out the compensation proce...