Can or should we pay a board member? It’s a common question not-for-profit organisations ask our legal advice team. Only 15 per cent of board members are paid, meaning over 80 per cent of board members give their time, skills and expertise voluntarily, according to a report of the Australian Institute of Company Directors (AICD).
There are important matters that an organisation will need to consider before deciding whether or not to pay a board member. For example, an organisation’s constitution may not permit the payment of board members. Or the organisation may have a licence that does not allow the payment of board members (for example, a licence obtained after 1 July 1998 allowing a company limited by guarantee not to use the word “Limited” at the end of its name). Payment to a board member may also affect the volunteer nature of the relationship between the organisation and board member. The consequences of this change should be considered in detail by both the organisation and the board member before determining whether or not payment to board members is an appropriate strategy for the organisation.
To view more on the role of directors from Not-for-profit Law, click here.