Can Employees Serve on Nonprofit Boards?
An employee can serve on a charity’s board, but important considerations arise. It is common for a CEO or director to hold a position on the board, given their unique legal status. While they perform services, they are not considered staff. Despite being legally allowed in most states, having paid staff serve on boards can lead to conflicts of interest.
Board Governance and Operations
Board governance and operations are structured to ensure effective functioning and decision-making. By-laws provide guidelines on how to remove members through a vote, often requiring a two-thirds majority at a regular meeting. In some cases, third parties may appoint nonprofit members, and organizations may implement mechanisms such as reserved board powers or require super-majority votes to balance competing interests.
Compensation and Leadership Roles
Nonprofit salaries can help mitigate burnout among members. While an individual can hold the roles of President and CEO, the laws typically mandate the designation of one individual as the President. Board compensation can trigger IRS audits, and the majority of board members are unpaid volunteers. Adherence to key 501(c)(3) rules is crucial, such as not being a paid employee, demonstrating commitment to the mission, and volunteering time monthly.
Additional Information
There are no specific laws prohibiting elected officials from serving on nonprofit boards. However, considerations related to conflicts of interest may impact their involvement. Active participation in programs, fundraising, and management is common on working boards, with the decision to hire staff contingent on the scale of the nonprofit organization. Ultimately, individuals join boards to leverage their skills and drive positive change, with the most suitable approach being contingent on the organization’s mission and the goals set by its founders.