Offering an attractive compensation package is a valuable tool for recruiting and retaining top talent for both for-profit and tax-exempt organizations. However, tax-exempt organizations are limited in the types of compensation they can offer executives due to practical and legal limitations. With careful planning it is possible to provide attractive compensation and retirement packages to executives of tax-exempt organizations, although the blend of compensation will be different than what is provided to for-profit organizations.

For an analysis of the legal and other issues that tax-exempt organizations must consider when designing compensation arrangements for their executives, see Practice Note, Executive Compensation for Tax-Exempt Organizations.