Excessive CEO Compensation and Volunteer Numbers in Non-Profit Organizations

This study examines whether excess executive compensation has adverse effects on volunteers' willingness to make labor contributions to non-profit organizations. We use compensation information in IRS Form 990 and find that for small organizations excess CEO compensation negatively affects the number of future volunteers working for the non-profit organization, but only if there is media attention regarding the CEO's compensation. This effect is stronger for more charitable organizations and organizations that rely less on volunteers. We do not find evidence that volunteers react to compensation without media attention or in large organizations. Hence, our study presents previously undocumented implications of excess compensation in the non-profit sector and sheds light on the role of the media in disseminating compensation information to volunteers.