In the spring, four U.S. senators refused to approve a $425 million package of federal grants for the Boys & Girls Clubs of America after learning that the organization paid its chief executive almost $1 million in 2008.

The IRS office that monitors charities is taking a close look this year at the paychecks of those who run nonprofit colleges.

And Sen. Charles Grassley, R-Iowa, has told Treasury Secretary Timothy Geithner that he's concerned the IRS is not tough enough in policing pay in the nonprofit sector -- and that regulations governing compensation are too weak.

More than 200 charities nationally pay CEOs more than $1 million annually, a 2009 Observer investigation found. More than 80 nonprofit leaders in the Carolinas have gotten pay exceeding $500,000.

Loopholes and understaffed regulators allow nonprofits to pay almost any salary, the Observer found.

Regulators rarely enforce the rules that do exist. Most years, fewer than 10 of the nearly 2 million U.S. nonprofit leaders are penalized for receiving excessive compensation. And the IRS office that monitors nonprofits is so thinly staffed, it examines just 1 percent of their returns.

Among the nonprofit executives in the Carolinas who have received six- and seven-figure salaries:

David Cerullo collected nearly $1.7 million in 2008 for running the Inspiration Networks, a nonprofit religious broadcasting company headquartered in Lancaster County, S.C.

John Waskin, who led Cornelius-based American Credit Counselors, was paid $5.1 million when the nonprofit folded in 2005. That was almost everything in its bank account. Most of that money was payment for a pension distribution approved by the group's board of trustees. As founder of the group, which helped consumers manage their debts, Waskin played a key role in choosing the trustees.

Franklin Graham collected $1.2 million in 2008 from two groups he leads -- the Billy Graham Evangelistic Association and Samaritan's Purse. Graham agreed to go without pay from BGEA and forgo future payments to his retirement accounts after Observer questions about his compensation.

Charity Navigator, a group that evaluates nonprofits, fields about 3,000 comments from its users each year. Most of them are complaining about executive pay.

"The mantra is... 'I've been giving to this charity for years. I now see what the CEO is making. And I will never make another donation to the organization,'" said Ken Berger, the group's president.

Despite explosive growth in the number of nonprofits in recent years, many state and federal agencies responsible for monitoring charities have lost staff.

But in some states, public officials are starting to crack down on high pay.

In New Hampshire, Attorney General Michael Delaney is investigating compensation to nonprofit hospital executives. And Vermont legislators are working to curb salaries paid by nonprofit groups that have contracts with the state.

In New Jersey, executives of social service agencies that do business with the state cannot be paid more than $141,000 of tax money each year, under a new directive.

Most nonprofit leaders do important work for relatively little pay.

The majority get less than $100,000 a year, according to data compiled by GuideStar, a group that collects information on thousands of nonprofits.

Large charities such as the Boys & Girls Clubs and the American Cancer Society, which take in more than $100 million annually and tend to pay their leaders six-figure incomes, account for just two-tenths of 1 percent of the nation's more than 1 million nonprofit groups, according to Charity Navigator.

Many charities reduced pay to their leaders as the recession cut into donations and other income.

Federal law prohibits charities from awarding excessive compensation to their leaders.

But to pass muster with the IRS, virtually all charities have to do is show they examined salaries of people in comparable positions and left the decision to independent boards.

The rules allow nonprofits to compare their pay packages to those of executives in the for-profit world, where seven-figure compensation is common.

The IRS is beginning to take a closer look at the comparable figures that charities use to set executive pay.

"Now it's time to drill down a little deeper," said Judith Kindell, a senior technical adviser in the IRS office that monitors nonprofits.

In a current study of nonprofit colleges, the agency is instructing those institutions: "Don't just tell us there are comparables... Tell us why this is what you're relying on," Kindell told the Observer.

An interim report on the study, released in May, shows that the highest-paid officers of large colleges and universities receive an average of about $428,000 a year.

Setting arbitrary limits on executive pay makes little sense, says Berger, of Charity Navigator. Instead, he would like to see nonprofits carefully measure their public service and tie that to the compensation of their executives.

Still, he said, the public anger is understandable.

"The fundamental common sense of the American public is right on this," Berger said. "It does become absurd when you hear these stories of people living in penthouse suites, driving Jaguars and running charities."