Board Compensation

About this collection: Guidance on the legal regulations regarding compensation, suggestions for how to initiate a conversation among your board members about whether or not compensation is appropriate, and suggestions for how to develop a written policy based on this conversation.

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Board Compensation: Reasonable and Necessary?

Passages Issue Briefs
Deciding whether to compensate or reimburse family foundation board members can be a difficult and complex decision. This Passages Issue Brief provides guidance on the legal regulations regarding compensation, suggestions for how to initiate a conversation among your board members about whether or not compensation is appropriate, and suggestions for…

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Questions from NCFP Members on Board Compensation

Article
Q: Our foundation’s third generation is coming on the board and some have young children. Some family members say the lack of child care during board meetings hinders participation. Can the foundation pay for child care so that parents can attend board meetings?

Additional Resources

NCFP Trends 2020 Study Data: Board Compensation and Expense Reimbursement
NCFP

Trustee compensation: Should your foundation pay?
GMA Foundations

Can Board Members Be Paid?
National Council of Nonprofits


Perspectives and Suggestions for Recruiting and Compensating Community Board members

Many family foundations compensate community board members; through the allocation of discretionary grantmaking funds, direct compensation, or both.

Here are some sample policies from our Policy Central page:


Guidance from the IRS

The IRS offers the following overview advice with regard to paying compensation or reimbursing expenses for disqualified persons:

Paying compensation or reimbursing expenses by a private foundation to a disqualified person is generally an act of self-dealing. The general rule does not apply, however, to the extent the payments, which cannot be excessive, are for personal services that are reasonable and necessary to carry out the foundation’s exempt purposes. Thus, it is not an act of self-dealing for a private foundation to pay reasonable compensation to a foundation manager, who is an investment advisor, for managing the private foundation’s investment portfolio. Also, paying reasonable compensation to trustees of a trust would not constitute self-dealing, because their services are necessary.  See Exceptions to Self-Dealing.