NON-PROFIT (501c3)

Nonprofits exist to do good—whether it’s helping the homeless, supporting education, or spreading love. Their earnings can’t benefit private individuals; it’s all about the mission. Directors of nonprofit organizations, including those operating under section 501©(3) of the Internal Revenue Code, receive reasonable compensation. This means their pay aligns with industry standards and their specific responsibilities. If directors are compensated, their payments follow accountable plans, excluding substantiated business expenses from gross income. However, payments under unaccountable plans (e.g., exceeding $600 per year to independent contractor directors) are taxable income and must be reported to the IRS. Ensuring ethical practices and spiritual integrity while navigating compensation complexities is crucial for nonprofits committed to their mission and community impact.

FOR PROFIT (LLC/CORP)

Any for-Profit companies' primary goal is to generate profits for shareholders and owners. While they may engage in corporate social responsibility, their primary motive is financial gain. Compensation structures vary, but they typically follow market norms. There’s no strict requirement for accountable plans. Profits are distributed among shareholders, owners, and employees. Shareholders often receive dividends based on their ownership stakes. While ethical considerations vary, the primary focus is often on financial success and shareholder value.