Template · Governance
Compensation approval minute
A board minute excerpt for approving pay, a stipend or a deal with an insider, recording each step of the IRS rebuttable presumption.
The Word file opens in Microsoft Word, Google Docs, Pages and LibreOffice. Reviewed October 21, 2026.
Use this minute whenever your board approves pay or a deal for an insider: a salary or raise for the founder or executive director, a stipend for a board member, or rent or a contract with a board member's business. The tax law calls these insiders disqualified persons. Our guide to paying people fairly explains who they are and why this matters.
If the board follows three steps, the IRS presumes the pay or price is reasonable. This is called the rebuttable presumption. The IRS says the board must:
- approve the arrangement in advance, with only members who have no conflict of interest taking part,
- get and rely on comparability data before deciding, and
- document the basis for its decision at the time.
The IRS says the record should include the terms and date of approval, the members present for the debate and vote, the comparability data relied on, what any conflicted member did, and the basis for the decision. This template has a line for each.
How to adapt it
- Paste this section into the minutes of the meeting where the decision is made. Use it with our board meeting minutes template and your conflict of interest policy.
- Name the comparables. List each organization or source and the figure it gave. For organizations with annual gross receipts under $1 million, the regulations say data on what three comparable organizations in the same or similar communities pay for similar services is enough.
- Count everything. The IRS counts salary, bonuses, deferred pay, most benefits and the value of a below-market loan as compensation. List them all in the terms.
- Record who left the room, and when they came back.
- Write it up promptly. The regulations say the record must be prepared before the later of the board's next meeting or 60 days after the decision, and then approved by the board as reasonable, accurate and complete.
- Attach the comparability data to the minutes and keep it with them.
- Delete the notes in brackets before you finalize.
Preview
Excerpt from the minutes of the Board of Directors of [ORGANIZATION NAME]
Meeting date: [DATE]
Approval of compensation for [NAME AND POSITION]
Arrangement considered. The board considered [DESCRIBE THE ARRANGEMENT, FOR EXAMPLE: AN ANNUAL SALARY FOR THE EXECUTIVE DIRECTOR / A STIPEND FOR THE BOARD TREASURER / A LEASE OF OFFICE SPACE FROM A COMPANY OWNED BY A DIRECTOR].
Conflict of interest. [NAME] disclosed that [HE / SHE / THEY, OR THEIR FAMILY MEMBER OR BUSINESS] would benefit from the arrangement. [NAME] answered the board's questions and then left the meeting at [TIME], before the discussion and vote. [ALSO LIST ANY OTHER DIRECTOR WITH A CONFLICT, WHAT THEY DISCLOSED, AND THAT THEY LEFT.] [NAME] returned at [TIME], after the vote.
Members present for the discussion and vote.
- [DIRECTOR NAME]
- [DIRECTOR NAME]
- [DIRECTOR NAME]
None of the directors listed above has a conflict of interest regarding this arrangement.
Comparability data obtained before the decision. Before deciding, the board reviewed the following data, copies of which are attached to these minutes:
- [ORGANIZATION OR SOURCE 1]: [POSITION], [LOCATION], [ANNUAL BUDGET OR SIZE IF KNOWN], [PAY OR PRICE], [YEAR AND WHERE THE FIGURE CAME FROM, FOR EXAMPLE ITS FORM 990, A SALARY SURVEY OR A JOB POSTING]
- [ORGANIZATION OR SOURCE 2]: [SAME DETAILS]
- [ORGANIZATION OR SOURCE 3]: [SAME DETAILS]
[IF YOU USED A COMPENSATION SURVEY OR A PROFESSIONAL'S ADVICE, NAME IT HERE.]
Terms approved.
- Position and duties: [POSITION; HOURS PER WEEK OR FULL TIME]
- Salary, stipend or price: $[AMOUNT] per [YEAR / MONTH / MEETING]
- Other compensation and benefits: [LIST EACH, FOR EXAMPLE HEALTH INSURANCE, RETIREMENT CONTRIBUTION, BONUS, OR "NONE"]
- Start date and term: [DATE; LENGTH OF TERM OR "UNTIL REVIEWED"]
- How it will be documented as compensation: [FOR EXAMPLE: A SIGNED EMPLOYMENT AGREEMENT AND FORM W-2 / FORM 1099]
Basis for the decision. The board concluded that the total compensation [OR PRICE] is reasonable because [EXPLAIN IN ONE TO THREE SENTENCES, FOR EXAMPLE: IT IS WITHIN THE RANGE PAID BY THE COMPARABLE ORGANIZATIONS LISTED ABOVE FOR SIMILAR WORK, AND REFLECTS THE ROLE'S HOURS AND RESPONSIBILITIES]. [IF THE AMOUNT IS ABOVE THE RANGE OF THE DATA, RECORD WHY.]
Vote. On a motion by [NAME], seconded by [NAME], the board approved the arrangement on the terms above. Vote: [NUMBER] in favor, [NUMBER] against, [NUMBER] abstained.
Record. These minutes were prepared by [NAME], [SECRETARY], on [DATE], and approved by the board as reasonable, accurate and complete on [DATE].
Signed: ______________________ [NAME], Secretary
Checklist before the vote
General information. Not legal, tax or financial advice. Rules change and every situation is different, so check the official sources and talk to a qualified professional before you act. More about this.
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Sources
Checked on October 21, 2026. Rules and fees change, so follow the links for the current version.
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