The Three-Comparables Rule: 94% of Paid Officer Positions at Small Nonprofits Have Three Comparable Organizations in the Same State

Of 69,499 paid officer positions at small nonprofits (65,322 organizations, 65,333 filings, tax years 2021–2024), 93.7% have at least three comparable organizations filing in the same state. Narrow the community to the same city and the share falls to 55.1%. Require the same city and the same NTEE sector and it falls to 22.0%.

The rule

Treasury regulations include a special rule on comparability data for small organizations. Treas. Reg. §53.4958-6(c)(2)(ii) reads:

The rule speaks only to the data. The rebuttable presumption of reasonableness has two further conditions: advance approval by an authorized body whose members have no conflict of interest, and documentation of the basis for the decision made at the time the decision is made (Treas. Reg. §53.4958-6(a)). See the rebuttable presumption of reasonableness for all three.

The regulation does not define a similar community, and this analysis does not decide what counts as one. It measures how many comparable organizations a small organization can find under four readings, from broad to strict.

Three comparables are within reach in the state, and for a little over half of positions in the city

Three comparables in the same state for 93.7% of positions, in the same city for 55.1%, in the same city and sector for 22.0%

Source: CauseComp Form 990 corpus as refreshed on October 30, 2026, tax years 2021–2024.

The gradient is the finding. Read as the state, the community almost always holds three comparable organizations that file publicly. Read as the city, it holds them for a little over half of positions. Adding a match on NTEE sector leaves fewer than one position in four with three peers within a city, against more than four in five across a state.

Moving from the state to the city removes 26,822 positions (38.6% of all positions) from the group with three comparables. Under the state reading, 4,401 positions lack three comparables; under the city reading, 31,223; under the strictest reading, 54,228.

Requiring the same sector costs 11.0 points across a state and 33.1 points inside a city: across a state it keeps 88.3% of the positions that had three peers, inside a city 39.9%. Reading the community as the city costs more than adding the sector in either order: 38.6 points against 33.1 when the city comes first, 60.7 against 11.0 when the sector comes first.

The state-level share moves little with size: 92.8% for organizations with revenue under $500,000 (48,445 positions) and 95.7% from $500,000 to under $1 million (21,054 positions).

Below the chief executive, in-state peers are scarcer: 85.6% of positions against 98.2%

The share does move with the role. CauseComp's Executive Director / CEO role has three in-state peers for 98.2% of positions (44,242 positions); every other officer role combined, 85.6% (25,257 positions). The other roles lack three in-state comparables about eight times as often: 14.4% of their positions (3,625), against 1.8% for the Executive Director / CEO role (776). Executive Director / CEO positions are 63.7% of the 69,499, so the all-roles share leans on that role, which is matched more often than the other roles combined. Officers other than the chief executive are 36.3% of positions but 82.4% of those without three in-state comparables.

What this means for a small organization's board

Three comparables in the same state are within reach for nearly every paid position in this population. Three in the same city are not, for more than four in ten of them, and three in the same city and sector are the exception. A board relying on the small-organization rule can record which reading of “same or similar communities” it applied, and why, alongside the organizations it used. For building and recording the peer set, see nonprofit compensation peer groups and what counts as appropriate comparability data. CauseComp's comparables set, drawn from Form 990 filings, is part of the Professional plan; see plans and pricing.

Who is in the data

Only small organizations that report a compensated officer appear. The findings describe small organizations with a paid officer in the data, not all small organizations. The corpus leaves out low-pay, low-hour Part VII and 990-EZ officer rows and rows from very small returns; Schedule J rows are not filtered this way.

How we built this

We took the latest Form 990 or 990-EZ return, for tax years 2021–2024, of each organization with total revenue under $1 million that section 4958 applies to, as refreshed on October 30, 2026, covering the 107 officer roles CauseComp publishes: 69,499 positions at 65,322 organizations, from 65,333 filings. For each paid officer position we counted other organizations reporting the same role with total revenue between half and twice its own, under four readings of community and services: same state, same state and NTEE sector, same city, and same city and sector. Peers are distinct organizations and may themselves have revenue of $1 million or more. A position with no state or city on record counts as having no peers on a cut that matches on it. Every cut reported has at least 20 positions. The page reports counts and shares only, and no compensation figure.

Scope and limits

Each filing is one Form 990 or 990-EZ return; Form 990-PF returns of private foundations are not covered. These figures include only organizations section 4958 applies to: 501(c)(3) public charities and 501(c)(4) and (c)(29) organizations; organizations of any other type, such as 501(c)(5) and (c)(6) organizations, are left out. Under Treas. Reg. §53.4958-2(a)(2)(i), a private foundation is not an applicable tax-exempt organization for section 4958 purposes, and its compensation of disqualified persons falls under the self-dealing rules of section 4941, so this page does not cover private foundations.

• Small: total revenue under $1 million on the organization's latest filing. The regulation's test is annual gross receipts including contributions, which the corpus does not record. Total revenue is net of some amounts that gross receipts include, such as the cost of goods sold, so it can be lower than gross receipts, and the screen can include some organizations whose gross receipts are $1 million or more. The regulation also permits an average of the three prior taxable years and requires controlled entities to be aggregated (Treas. Reg. §53.4958-6(c)(2)(iii)); this screen uses a single year and no aggregation.
• Community and services: community is proxied by the state, or the state and city, and services by the organization's NTEE sector, one of each per organization. Neither proxy is a legal definition of a similar community or of similar services.

1. (a) A count of comparable organizations says the filings exist. It does not say a board would judge each one comparable on every relevant factor.
2. (b) City matching uses the city on the organization's record in CauseComp's data, so spelling variants and neighboring municipalities fall outside a match; the city-level shares may understate what a board reading community as a metropolitan area would find.
3. (c) For 16.6% of positions the NTEE sector is an earlier IRS code or one CauseComp assigned, because the organization's current IRS record has none, so the sector rows are less firm than the rest.
4. (d) This analysis is research, not legal or tax advice; organizations should consult their advisors on their specific facts.

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