Should you pay your Board Member?

it’s poor governance to draw compensation from an organisation while being on the Board

Does Sanjay Naik need a salary?

Subah is a (hypothetical) five-year-old voluntary organisation. It works in the area of capacity building and organisation development. Started by an enthusiastic founder, Sanjay Naik (hypothetical name), its team has grown to include 10 people. Sanjay, a qualified chartered accountant, is on the Board along with three others – the Board is an active one. Sanjay has been giving his time pro bono to the organisation and has survived on savings and consulting work that he does with for-profit entities. Increasingly, he has to spend more time with Subah as the demands from the sector are growing. Sanjay now wants to work full-time with Subah. He wants compensation from the organisation.

 The Board’s verdict

The Board feels that if he starts to draw a salary, Sanjay must step off the Board. They feel it would seriously impair objective decision-making. Besides, they say, how can one be part of a body that evaluates and determines his/ her own salary?

 Sanjay Naik’s viewpoint

Sanjay is stubborn and feels that textbook principles of good governance cannot be applied as is. The Board is threatening to quit en masse if Sanjay doesn’t step off the Board or continue to work pro bono.

 My verdict

Should a Board member of a voluntary organisation be paid for his/her time? I have a simplistic view, a dogmatic one. In one word – NO.

 The rationale

Having worked over the past few years with voluntary agencies in India and abroad, I have found that in practice, there exist all sorts of governance models in India among organisations – where staff sits on Boards, where Board members are compensated for their time, where a paid CEO is a voting member on the Board, and where Board members will also volunteer their time in the truest sense of the word and not derive any pecuniary benefit from the organisation either directly or indirectly. Such Board members are, however, reimbursed for their expenses against actuals.

 The fundamental principles on which any voluntary organisation is built or ideally should be, in my view, include ‘a spirit of service and compassion in the core team and a desire to make a difference to those less privileged’.

 My solution

This does not mean that the highest standards of professionalism or efficiency are not met. When money becomes any form of motivation or compensation for an individual to be part of a voluntary organisation, especially while serving a Board position, then there is a compromise on the spirit of service.

 The argument that I have heard in favour, is

‘After all I am giving 20 hours of my time to the organization,’ or ‘What will I do to earn a living?’ or ‘I am the most qualified to do this and if we were to buy this from the market, we would have to pay a lot more,’ or ‘We have a conflict-of-interest policy in place,’ or ‘After all, what does it matter as long as the organisation is being managed and run efficiently?’.

 All of these seem legitimate. After all, how will people survive if they spend most of their time in an organization without being paid for it?

 I would say, “Fair enough - they could still do that, but they must step off the Board.’

 They could serve as consultants, professional experts offering their expertise for a price, or staff that will be governed by the organisation’s staffing policies of performance and compensation. To be in a ‘comfortable position’ of  being compensated (irrespective of the amount) and being accountable to oneself , determining one’s own performance, and correlatively, one’s compensation, seems unfair.

 Encourage good governance – get yourself an all volunteer Board. It’s easier to do this than to find the money to compensate Board members.

 Why compensation for Board members is poor governance

1. Board members are thought of as volunteers – Boards that are not completely volunteer-driven will discourage voluntarism in the sector
2. Donors give money to further the mission of the organisation – not to compensate Board members
3. Such Boards also discourage giving
4. Boards that pay their members will be unable to govern the organisation in the truest sense - too much personal stake impairs objective judgment.
5. Using good, competent people who can serve as Board members without compensation will encourage greater participation in social change and lead to better governance.

 This article is written by Aarti Madhusudan for Raisers’ Ask. Aarti runs Governance Counts, an initiative that helps strengthen good governance in voluntary organisations. She can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it