Nonprofit executive compensation tops the current list of IRS hot nonprfoit issues. In recent years, the IRS has been ramping nonprofitt its oversight and enforcement of nonprofit executive compensation. With all the rancor surrounding executive perks and bonuses on Wall Street, expect that populist sentiment to spill over into the nonprofit sector as. So, foynders do you do that? Reasonable compensation. It all starts. The IRS requires compensation packages for nonprofit executives and other nonprofit employees, for that matter to be reasonable. Reasonable compensation is best understood in light of factors the IRS examines when determining whether or not a charity is exceeding reasonableness with its compensation arrangements. These factors look something like this:. Its also important to note that each factor is weighted differently depending upon the circumstances. It is a very subjective exercise. Frankly, it just depends.