Those of you follow this blog know that I’ve been unpacking old boxes of “stuff” in my basement for the last few weeks. There is a small mountain of boxes from my last place of residence. It is stuff that was deemed unimportant at the time of unpacking, but important enough (for whatever reason) not to throw away. As I’ve encountered old non-profit training materials and memories, I’ve shared some of it here at DonorDreams blog.
Last night, I rummaged through another two boxes in an effort to get ready for garbage day on Monday. As I unpacked and recycled more stuff, I came across a March 2004 edition of BoardSource’s “Board Member” magazine. The cover story was titled: “At What Cost? The Board Compensation Debate.” James Orlikoff wrote the proponent article “Yes! In the Accountability Era, Board Members Must Be Paid.” Kevin Murphy wrote the opponent article “No! Paying Boards Is a Solution in Search of a Problem.”
I remember reading this pro-con piece almost a decade ago and I found myself firmly in the “Heck No!” camp. However, I’ve softened over time and enjoyed re-reading this article last night (especially because it took me away from the job of unpacking boxes . . . LOL).
“In today’s challenging, complex, and litigious environment, board compensation may soon emerge as a key component of effective governance.”
Here is the thesis of Murphy’s opponents argument:
“. . . compensating board members not only undermines public confidence in the sector, but also begins to erode the underpinnings of our governance system. The media attention to compensation scandals makes one thing clear: With board member compensation, the potential abuses outweigh the potential benefits.”
One reason for my recent defection from the opponent’s camp is that I see many municipalities compensating their city council members. In my hometown of Elgin, Illinois, a citizen who gets voted onto the council received a $1,000 monthly stipend, the ability to participate in the city’s health insurance program, and a few other small perks.
I honestly don’t think the issue of compensation undermines public confidence in our municipal institutions, and I don’t see any erosion to the underpinnings of the governance system. In other words, I am looking at an empirical example and don’t see any evidence of what the opponents to board compensation argue.
Sure . . . the city of Elgin is not a non-profit board of directors, but it also isn’t a for-profit board either.
So, let’s look at a handful of arguments put forth by the proponents:
- A lot is asked of non-profit board members, and compensation is a way to reward such work and create an incentive to do a quality job.
- For-profit board members are compensated, and non-profits might need to start doing the same thing in order to compete.
- Adding compensation to the picture might contribute to a more rigorous board recruitment and evaluation process.
Orlikoff ticks off 10 reasons for compensating non-profit board members, and after reading each argument I find myself shrugging my shoulders and saying “Hmmm . . . maybe.”
However, in my opinion, I am left wondering if compensation might change the dynamics around “engagement” of non-profit board members.
While I have not yet formed an opinion, if someone could show me that non-profit board members would be more engaged in activities like fundraising, financial management and board governance issues, then I might joyfully jump into the proponent’s camp.
I know that some of you might be scratching your heads right now thinking it is illegal to compensate non-profit board members. The simple answer is that it is not illegal to do so. It is just a little more complicated.
According to this BoardSource article, two percent of non-profits currently pay their board members (mostly large and complex organizations), and 25% of foundations pay their board members. Joanne Fritz at about.com answered this question in her post titled “Can a Nonprofit Compensate It’s Board Members?”
So, here I sit again in the middle of a good debate. While I understand board compensation alone won’t improve non-profit board governance, I am left wondering if it isn’t part of the solution.
What are your thoughts? Would adding a small stipend create a change in recruitment efforts? Year-end evaluations? Meeting attendance? Committee meeting attendance? Fundraising? Engagement? What are some of the problems we might create by opening this ‘can of worms’?
Before you share your thoughts in the comment box below, please consider the following quote from American business man James Casey.”
“The basic principle which I believe has contributed more than any other to the building of our business as it is today, is the ownership of our company by the people employed in it.”
I dunno . . . let’s talk about it. Here’s to your health!
Founder & President, The Healthy Non-Profit LLC