Board members of nonprofit institutions should be paid for their work. You heard me. Board members of nonprofit institutions should be paid for their work.

It’s a contrarian view that is often met with indignant and / or quizzical reactions.

“Nonprofit board members, getting paid, makes no sense, they should be focussed on mission, not money,” the Board Chair of a large nonprofit funder told me.

“It is a conflict of interest, we are looking for altruism,” said another board chair of a medium-sized Philly nonprofit.

Of course, board members should be dedicated to the needs of the organization. But what does that have to do with getting paid?

Under the current rules, nonprofits can’t pay board members without forfeiting their nonprofit tax status. But such a rule can be changed. The question is, why change it?

Simply put, the current approach is counterproductive to the success of the nonprofit. Pay board members, and nonprofits will have better outcomes for their constituencies.

Here’s why.

Currently, board members must be volunteers. The idea seems to be that they should never take resources from (what is usually) a resource-constrained org. They give their time freely (without constraints?) and solely to advance the nonprofit’s goals.

This is no small thing. Organizations are asking their board members to commit hours and hours of time over a period of years and utilize their expertise and skills to improve the work. As volunteers, such commitment is supposedly clean, pure and has no conflict.

But by being volunteers, boards are inherently compromised.

Pay a board member and their relationship to the organization inherently changes. There is a contract where both sides are contributing in an agreed-upon exchange. Societal and organizational expectations rise when someone is paid.

The problem with volunteers

Think about how we think about volunteers. What do we expect of them? If a job needs to be done, who would you rather count on, volunteers or people paid to do the work, especially if both are equally committed? Volunteers are defined as people “who freely offer to take part in an enterprise or undertake a task.” But the consequence of giving “freely” is that they have inherently less of an obligation to fulfill their commitment. This is not a question of their own willingness, but rather the design and the underlying mindsets associated with volunteering systems. Simply put, a volunteer has less “skin in the game,” at least there is nothing structural that mandates involvement.

Pay a board member and their relationship to the organization inherently changes. There is a contract where both sides are contributing in an agreed-upon exchange. Societal and organizational expectations rise when someone is paid.

To be clear, this is not an argument that paying money is a necessary incentive. It isn’t. Board members do their work because they do indeed care, and the amount of money they receive is not going to be a difference maker. But paying board members changes both the perception and reality of what the board is.

Board pay is now an expense line in the P&L. It explicitly creates a value for the work. And putting money into boards will actually over time build the industry on how board members should do their jobs. The professionalism of boards and board members will be better supported and enhanced.

Do good, get paid.

Altruism is in the ethos of boards. People join boards out of their desire to do good. If you paid them, the trope goes that would somehow soil their commitment to the cause. True altruism does not require money. Maybe, but if that is true, why pay the executive director or any employee? We want the staff to care about the mission. They want to do good, so why should they be salaried? Such an argument is absurd. Staffs work hard and indeed are often arguably underpaid. They deserve their money, but so too do board members. Good board work is invaluable. Paying them creates an expectation of quality. Doing good and getting paid are not mutually exclusive.

It can help with diversity

Historically, board members were often chosen for one reason: They were rich. They were expected to be the major donors to the institution. In for-profit terms, it was like they were the largest shareholders or majority owners who were responsible for steering the organization. After all, they paid for it. But more recently, the idea of how boards are constituted has changed. We are looking for diversity, often the perspectives of those of lower incomes who may have greater perspective on what the organization is trying to accomplish.

If you want this greater diversity, you can not reasonably expect to do that without paying board members. The chair of a local social service nonprofit made this point to me. The clients they serve can provide powerful insight to the direction of their organization. Offering them seats on the board can be very beneficial to the organization, but those members may not be able to take on the responsibility without being paid. Board members are often required to give money to be on the board; foundations use the metrics of “how many and how much board members give” as a measure of the board’s strength and commitment. That seems constraining if an organization wants to choose some of its board members for reasons other than their ability to give and get. Indeed, board members who can’t give, will still be expected to and can contribute immensely.

How this could work

How much should Board members be paid? It won’t and doesn’t have to be substantial, but it should be meaningful. A pay scale could be created by the industry itself and those who provide oversight to it like a Charity Navigator. While I would not make it binding, it would set expectations. Of course, the amounts would be made public as a part of the 990, thus subject to scrutiny and potential condemnation. The IRS would have the ultimate say in whether the organization retains its 501c3 (tax deductible) status.

There are certain nonprofits that can’t afford the costs of paying board members. These organizations could offer to pay their board, but with a caveat — they would be asked to contribute their pay back to the organization. They would receive the charitable tax deduction to which all donors are entitled and which becomes another way for them to contribute.

So let’s consider making pay for board members something nonprofits are allowed to do.

Doing so will create

• • • a more diverse board.
    • a more professional board.
    • a more committed board.
    • a more effective board.

Richard Binswanger is principal at Inlocalyst, a Philadelphia-based impact investing firm, and a board member of several area nonprofits.

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PHILLY NONPROFITS DOING THE HARD WORK