Who Decides the Salary of Founders and Co-Founders of Nonprofits in India?
A quick look at transparency and governance gaps in deciding the salary of nonprofit executives.
On Paper, the Board Decides
Under Indian trust and society law, the Board — or a compensation committee — is meant to set and approve the salary of founders and executive directors, based on role, responsibility and market benchmarks, and record the decision in the minutes of a board meeting.
The basic principle is simple: the person whose salary is being fixed should not be in the room fixing it.
A Familiar Scene
Picture the kind of conversation that quietly shapes many Indian nonprofit boards. A founder invites a respected figure — say, a university vice-chancellor — to join the board, promising it will take no more than one meeting a quarter. The invitation is accepted, with one condition attached: that the university's students get internships at the founder's organisation.
It's a small exchange, but it reveals something important — neither party is fully independent of the other. Mutual interests like these can quietly influence decisions and compromise the objective, unbiased governance a board is supposed to provide.
In Reality, Founders Often Decide Their Own Pay
Many Indian NGOs have boards packed with friends, seniors or funders who sign off on what the founder, the executive director, or the organisation's chartered accountant proposes.
That turns "board approval" into rubber-stamping, not an independent decision.
Why It Keeps Happening
Many board members are retired seniors from corporate or government careers. Post-retirement, visibility fades and validation dries up — joining a well-known nonprofit's board restores some of that lost social capital, along with titles, events and networks.
"Most board members are on boards of multiple organisations, and they don't have much time to get too 'nosy' with tough questions. They mostly approve what we propose. If they get too nosy, nonprofit leadership circles might not recommend them to other boards. Boards keep rotating as per government norms anyway." — Testimony from a co-founder of a Bhopal-based nonprofit, who asked to remain anonymous.
The Governance Argument
Governance guides argue that truly independent board members — with no financial dependence on the NGO — are key to fair executive pay. But if everyone on the board owes their social capital to the founder, can they realistically say no to a raise?
These insights draw on a legal reference document on NGO governance, accounting and regulation, jointly published by FMSF and VANI.
The Norm vs the Reality
Good governance practice calls for disclosing the pay of a founder or co-founder who holds an executive position, in the organisation's annual report, board minutes and filings — a basic expectation for a public-purpose institution.
We reviewed the annual reports of 22 nonprofits with annual budgets above ₹10 crore. Not one disclosed the remuneration of its founder or co-founder, even where that person held a full-time, formal role in the organisation.
To check whether this opacity is normal, we asked friends working across six different organisations what their senior executives are paid. None of them knew. Our sample is small, limited by our own research capacity — if you know of an organisation that is transparent about leadership compensation, we'd like to hear about it.
So, Who Should Decide Founder Salaries?
An independent board or committee — excluding the founder, friends and relatives — using a written policy, market benchmarks and workload data, within legal limits on administrative expense and private benefit, and fully disclosed in reports. Anything less is a transparency problem in the organisation's governance.
Based on these questions: is your organisation transparent?
Two Questions for Founders and Co-Founders
What practical barrier exists to reporting founder or CEO pay, when other financial disclosures are already mandatory?
If compensation is decided by the board, how are they expected to assess fairness when no organisation reports this information, and there are no transparent benchmarks across the sector?
Questions Every Nonprofit Worker Should Ask
Who sets our founder or ED's salary, and where is that decision recorded?
What is the pay ratio between the highest-paid and lowest-paid employee, especially against frontline staff?
Is this information available in our annual report or on our website — or is transparency expected only from beneficiaries, never from executive leadership?
WokeOnPaper is an independent satire media collective led by a small group of development practitioners. Through memes, stories and commentary, it reflects on the everyday absurdities of the social sector — nudging it towards becoming more honest, participatory and democratic.