Some simple rules of thumb should be followed when designing benefits for key employees of NPOs. Particularly because these organizations' options are somewhat constrained due to cash-flow challenges, disclosure requirements, and tax rules, it's important to wisely use every penny allocated to executive benefits.

That Which is Not Understood is Not Appreciated. NPOs have fewer deferral options than for-profit companies. NPO executives are largely limited to qualified plans, 403(b) and 457(b) and (f). Unfortunately, NPOs' employers often market these benefits as options rather than benefits, and they don't distinguish between executive and employee needs. They simply allow the vendors to come to the business and sign up interested employees. If an executive suspects the organization's product offerings are less competitive than what is available in the retail market, the offering actually becomes a negative.
That Which IS Understood IS Appreciated. I'm aware of a large NPO health care system that made a major change to its benefits package for its physicians and executives. The organization slimmed down its benefits package and made it less complex, and its executives didn't stop there. They set up group meetings to explain the new package, and they offered financial education to the individual physicians and executives. This was both a benefit and a way to help these key people understand the "hidden paycheck" being provided. Now the organization is considering holding financial analysis meetings for spouses.
NPOs do not want to be IRS Test Cases. NPO execs and donors don't want to pay taxes while the organization itself does not have to pay taxes – a situation that presents a lethal opportunity for con artists. Over the years, this situation has led to abuses such as Charitable Reverse Split Dollar, in which contributors leveraged the charitable status of an organization to receive "tax-free life insurance." While it is tempting to help the organization's key people and stakeholders garner tax advantages, no one benefits from plans that result in a black eye and tax penalties. Especially for those organizations dependent on donor contributions, negative attention can affect not only the brand, but the bank account. In some cases, these tax issues are more a matter of omission than nefarious intentions. For example, the rules applicable to 403(b) and 457(f) plans have changed in the last few years. In some cases, the employer simply hasn't updated its plan to comply with new requirements, and the executive ends up suffering.
Time is an Executive Benefit. Particularly for doctors and busy executives, time is a precious commodity. These people, like any affluent consumer, need accumulation and protection products such as investments and insurance. The executive can benefit immensely if his or her employer will do the research, obtain volume discounts, offer competent advisors, and simplify paperwork. The power is not only in the benefit provided, but in how it is provided.

Many good people lead many world-class not-for-profits. Their benefits packages should demonstrate the same degrees of quality and effectiveness.

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