Representatives Rick Catlin, Dana Bumgardner, and Chris Millis have introduced House Bill 893 to investigate how taxpayer dollars are used by North Carolina’s nonprofit organizations in paying employee salaries. As of last year, the state appropriated around $600 million annually to nonprofit corporations; there over 50,000 nonprofit organizations in North Carolina, with a combined annual income of more than $80 billion. Nonprofits are exempt from paying taxes, including local sales and property tax.
During a recent meeting of the House Appropriations Subcommittee on Natural and Economic Resources, it was revealed that nonprofits in North Carolina can use public money to pay their employees up to $120,000 a year. “For some reason, the (employees of) nonprofits seem to be well paid. I want to find out why,” said Representative Catlin, who is a member of the subcommittee. “I’m a business owner and I’m struggling. I’m having to let people go. It just doesn’t sit well with me. (The commission’s) going to have to convince me that it’s necessary to pay them that much money.”
HB893 specifically asks for a 10-member Study Commission on Nonprofit Compensation to conduct research and provide analysis on four key questions relating to non-governmental entities that receive public funds:
- What would be the impact of capping the percentage of public money that can go towards employee salaries?
- What would be the impact of a salary cap of $100,000 for any employee of a taxpayer-supported nonprofit?
- What would be the impact of requiring that public money be used exclusively for providing services as opposed to going towards salaries?
- Is there any mission overlap or duplication of services between nonprofits that receive public money?
The Study Commission would have the authority to hold hearings, issue and enforce subpoenas, call witnesses to be examined under oath, compel relevant testimony, and draw per diem and travel allowances to pursue its activities. The Study Commission would be dissolved upon delivering its final report to the General Assembly in 2014. The report can also include recommended legislation based on its findings.
“Nonprofit salaries are a hot topic because of recent news stories about exorbitant compensation at five North Carolina nonprofits,” says Jane Kendall, president of the North Carolina Center for Nonprofits. “The board of directors decides on the compensation for the chief executive. Those five boards were not doing their job.”