Ten questions every director needs to ask about the board’s director payment policy

Historically, charity and not-for-profit boards have worked for the good of the cause, with no expectation of payment. The world has changed – people work longer hours and have less time to contribute, the retirement age has increased, and everyone seems to be busy – but this view of the way boards should operate persists.

In this climate, your organisation might be considering paying its board directors, to recognise the work they do and the responsibility they carry, and to make it easier for you to recruit new directors. 

These 10 questions are designed to help your board to explore the practical, financial and ethical dimensions of a board payment policy. They assume that your organisation does not currently pay its board directors.

To know why you should be asking these questions, download the full document.

1. Legal and regulatory issues. Is your organisation allowed to pay its directors? 

2. Finances. Can your organisation afford to pay directors, or could you raise extra funds for this purpose? 

3. Board composition and diversity. Do you struggle to recruit and retain high-quality board directors? 

4. Board composition and diversity. Do you have people from diverse backgrounds on your board? 

5. Board composition and diversity. Do you have consumers on your board? That is, people who are part of the group that your organisation serves, such as homeless people, artists, refugees, sportspeople, people with disability or people who’ve experienced domestic violence, for example? 

6. Board composition and diversity. Do you have difficulty attracting people with specific skills to your board?

7. Fairness. What would you say to someone who asked, “Why should board directors be paid and not the organisation’s other volunteers?”

 8. Director accountability and performance. Does your board find it difficult to hold directors accountable for reading meeting papers and completing assigned tasks? 

9. Expenses. How many of the following expenses do your board directors incur – without reimbursement – as a result of being on the board and attending meetings: meals away from home, accommodation, taxis, public transport fares, fuel, tolls, car running costs, carers, childcare, takeaway meals for kids, foregone income? 

10. Public relations, reputation and transparency. Would you expect to find broad support for paying board directors among your stakeholders – members, staff, volunteers, donors, funders, users, clients, the general public? And if you introduced such a policy, would you announce the change or keep it quiet?

To delve even more deeply, you can use ICDA’s Board Payment Wizard, which will help your board to consider these issues (and more) in more depth, and direct you to further resources. Go to https://communitydirectors.com.au/tools-resources/board-payment-wizard.

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