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Can a Nonprofit Compensate Its Board Members?

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Question: Can a Nonprofit Compensate Its Board Members?
Only about 2 percent of nonprofits compensate board members, and it is unusual outside of large, complex entities such as health care systems or large foundations.
Answer: Although nonprofit board service is usually a volunteer activity, reasonable fees for service are permissible if the bylaws allow, or the majority of the board determines that it is necessary. However, such compensation is quite rare. According to BoardSource, only about 2 percent of nonprofits compensate board members, and it is unusual outside of large, complex entities such as health care systems or large foundations.

Generally, board compensation can call into question a nonprofit’s financial integrity. At a time when unusually high nonprofit CEO compensation is often investigated, we do not recommend for most nonprofits that they compensate board members. There should be no problem finding community leaders to serve as volunteer board members. In fact, offering compensation might hinder your ability to recruit such board members.

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