• Board Compensation

  • A Board in Washington State voted to pay themselves $25 per person, per meeting

  • Compensation for directors of nonprofit corporations in WA State is specifically permitted by RCW 24.03A.160 and RCW 24.03A.545, but the ramifications of doing so could impact D&O coverage

    • D&O policies are either geared toward uncompensated volunteers -OR- paid directors, NOT both

  • Double-check your declaration, bylaws and articles of incorporation.  If you find no compensation prohibition in those documents, and your community is incorporated in WA State, the law is clear that compensation is specifically allowed by the Nonprofit Corporation Act (RCW 24.03A).  The Nonprofit Miscellaneous and Mutual Corporations Act is relatively silent re: compensation other than to say determining compensation is a power of the organization.

  • As always, being reasonable is required.  Just because most CICs do not compensate their volunteer directors does not mean that it is unreasonable for Jere's community to do so.  Is $25 per meeting, per director, a reasonable sum of money?  How many meetings are scheduled per year?  If you divide out the hours involved, and consider the dozens of hours some volunteers provide every month, it probably comes out to $1/hr or less.

  • Volunteer directors in Washington State have a duty of ordinary and reasonable care which is not synonymous with a fiduciary duty.  You might also enjoy reading To Pay or Not to Pay: Compensating Nonprofit Directors and Officers written by a law firm in Illinois.

  • We asked this question to an insurance broker (HUB).  Here's the response from a leading D&O carrier:

    • First, most governing documents do not authorize Director or Officer compensation. Second, all volunteer immunity statutes I am aware of refer to non-compensated. By definition, a volunteer is not compensated. Third, paid directors and officers do not qualify for our program as it is susceptible to conflicts of interest and the appearance of impropriety. I am not aware of any other programs that would allow compensated D&Os. Fourth, if you pay, it will not be long before you pay all. Also, how would compensation be determined? Also, they would be considered and have WC (workers compensation) consequences and corresponding issues with employment liability issues.

  • Want some language you can use in your own governing documents?  View Bylaws: Words of Wisdom.

Paper records you say?  Volunteer Carolyn from the great state of Illinois has a solution for your community.  Over the course of several years, Carolyn scanned, indexed and de-duped all the paper records from four associations dating back to the 1970’s.  In addition, she created a spreadsheet-based ledger to capture decades of decisions.   What a feat!

Click here to submit a volunteer feat to be featured in an upcoming CIC Info Bytes!