Governance & Oversight - Board Member Compensation

For the board of directors to properly guide a publicly-soliciting charity, provide oversight and assist in the decision-making process, its voting members should be focused on advancing the charity’s mission and avoid any influence that may cloud their judgment.

That is why the fourth standard in the BBB Standards for Charity Accountability has recommended limits 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 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 should 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 clergy serving on their board of directors should see additional details in the online explanation for this standard 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 exercise independent judgment.

Take a look at BBB charity reports to see if your charity of choice meets this important standard. For an A-Z directory of reports on nationally-soliciting charities, visit give.org/charity-reviews/national/. To access both local and national charity reports, use the search engine on our homepage give.org.

H. Art Taylor, President & CEO
BBB Wise Giving Alliance