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  • Employee on Non-Profit Board

    Not sure which forum I should be asking this in ... but ... what are the legalities of having a paid employee on the Board of the non-profit organization for which they work?

  • #2
    Is the employee the highest one in the org? Honestly I can see where it would be good for them to be on the BoD as they are the ones that have to carry out the day to day operations of the non-profit. The main conflict of interest I could see is if they vote on their own compensation level. They should recuse themselves from that to avoid the conflict.

    If they are not the highest, then I could see conflict arising between how they vote on Board issue and whoever is actually their boss in operating the nonprofit. For example, the janitor probably shouldn't be voting on compensation levels of his/her boss.

    Can you give a little more detail on their employee position?

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    • #3
      Just a thought but are there by-laws or rules of incorporation? There is a chance the company has already legally answered this question. Past that, if you look at their website, the President of the Ford Foundation (one of the big ones) is on their board. I am not saying they are right but it does seem to be legally possible in some states. On the other hand, you might want to read the following article.
      https://www.thebalance.com/can-nonpr...-staff-2502271
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

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      • #4
        I agree that more important than them just being on the Board is what their voting rights are, and to check the organization bylaws. Do not do anything that is not in your bylaws, or if you want to do something that isn't, you need to follow your procedure to amend them first.

        You can probably make them a non-voting Board member with little risk, and that is typical. If they vote, as hr for me, said they should not be allowed to vote on their own compensation. One way to avoid that is by carving out an Executive Committee, Compensation Committee or similar that consists of the unpaid Board Members, who vote on the compensation of the others. Again, you need to write that into your bylaws, and that is best done with the guidance of an attorney. In the nonprofit I serve on, the Artistic Director, who is compensated, is a non-voting Board member, and questions of his salary and contract are decided by the Executive Committee, which is everybody but him/her in Executive Session of our monthly meetings.

        I have to say, DAW, that in that otherwise excellent article, this sentence made me spit coffee: "There should be no problem finding community leaders to serve as volunteer board members. The payoff for those board members includes enhancing their professional reputations, meeting other people influential in their community, learning about community needs, and feeling good about their contribution to the*community welfare."

        I so wish that were true.

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