Implications for Policy Making: A Case Study of Executive Compensation at Nonprofit Organizations in New York State

Nonprofit organizations in today society face distinct challenges to their viability. Currently they are facing a legitimacy crisis which is a result of four main factors: focus of media on scandals, the aftermath of Sept member 11th attacks, congressional attention and a decline in public trust. The last decade witness increased media coverage of scandals and instances of impropriety at nonprofit organizations. The coverage by main stream media outlets has resulted in a literate public attuned to poor behavior at nonprofit organizations. The attacks of September 11th touched all aspects of American life. As a result, the various sectors comprising its society were compelled to respond to the needs in the wake of these attacks. The nonprofit sector was no exception, and they raised nonparallel donations to assist victims of this tragedy( Salamon, 2002). In turn, organizations were faulted for their inefficiencies at disseminating donations.As organizations fell under scrutiny other practices such as governance, and executive compensation came under fire. As is often the case, when substantial attention and public outcry is directed at a societal problem lawmakers are compelled to respond. In the case of executive compensation and other practices of nonprofit organizations, the Senate Finance Committee began to hold hearings to investigate these practices and assess various policy options to help remedy the problem