Wise Giving Wednesday: Board Compensation

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calendar icon Apr 03, 2024

Board Compensation

While in the business world, it is commonplace for members of the board of directors of a company to be compensated, it is not so for individuals who serve on the board of a publicly soliciting charity. A charity’s board members are usually unpaid for their oversight role. In part, this helps voting members of a charity’s board focus on advancing the charity’s mission and avoid any financial influence that may cloud their judgment.

That is why Standard 4 in the BBB Standards for Charity Accountability calls for a limit on the number of voting board members who receive compensation – may it be monetary or nonmonetary, direct or indirect (for purposes of this standard, board member reimbursement for travel expenses to attend board meetings is not considered compensation).

An example of a directly-compensated board member would be a paid charity staff member (such as the CEO) who also serves as a voting member of the board. An indirectly-compensated board member circumstance would take place if a voting member of the board was the spouse, sibling, parent or child of a paid staff member.

To meet BBB Charity Standard 4, not more than one or 10% (whichever is greater) of the total voting membership of the board should be directly or indirectly compensated. Also, if a board member receives compensation, that person may not serve as the chair or treasurer. For example, if a charity has seven board members, no more than one voting member should be compensated. If a charity has 20 board members, no more than two voting board members should be compensated.

Publicly soliciting churches and other houses of worship with compensated ordained clergy serving on their board of directors should see the additional implementation explanation on Standard 4 for further information on how this standard applies to them.

By ensuring that voting board members are free of financial interest, the board is better positioned to ensure its duty of loyalty to the charity’s mission.

Heart of Giving Podcast

This week’s Heart of Giving Podcast features Michele Evans, the founder and CEO of NxtWaves, a membership network aimed at redefining post-corporate life for leaders, promoting long-term career vibrancy and satisfaction.

Recent Reports

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

Finally, remember to let us know by going to give.org/charity-inquiry if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.

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