A. Federal tax law allows public charity 501(c)(3) organizations to pay compensation to these insiders as long as the amounts are reasonable and the services are actually rendered. The IRS may impose fines not only on insiders who receive unreasonably high payments, but also on board members who approve such payments.  In extreme cases, the organization can lose its tax exempt status.  

If you check this box yes, you are responsible for taking steps to insure that the compensation you pay is reasonable.

(Note that rules for private foundations, not covered here, are different.)​

Q. Are 501(c)(3) organizations permitted to

compensate officers, directors and trustees?​