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Can We Pay a Director to Work for Us

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It’s a common question for small nonprofits: if one of our board members has the skills we need, can we pay them to also serve as our executive director, consultant, or contractor?

The short answer is yes — but with important safeguards.

  • Separate roles: Payment cannot be for the person’s work as a director. Board service itself is almost always expected to be voluntary. But if a director is also providing staff or contractor services — for example, serving as CEO, bookkeeper, or program manager — they may be compensated for that work.
  • Conflict-of-interest rules apply: The director must not participate in board discussions or votes about their own hiring, compensation, or contract. The rest of the board should handle those decisions independently.
  • Document everything: Board minutes should record the disclosure of the dual role, the director’s recusal, and the process the board used to determine that compensation is fair and reasonable. Looking at comparable salaries or fees in your area helps show the board acted responsibly.
  • Think about optics: Even if legal, paying a board member can raise questions from funders or the community. Transparency, clear communication, and good governance practices go a long way toward building trust.

✔ Bottom line: Your nonprofit can pay a director for separate staff or consultant work, but you need to handle conflicts of interest carefully and document the process. Done right, it’s both legal and acceptable.

⚖ Employment law caveat: In addition to nonprofit governance rules, standard employment laws still apply. For example, in California it’s often difficult to classify someone as an independent contractor if they are carrying out core functions of the organization. In many cases, paying a director for staff-level work must be done through regular payroll as an employee, with all the usual tax and labor law compliance.

This article is provided for general educational purposes only and is not legal advice. For specific guidance, consult with a qualified attorney or HR professional familiar with your organization’s circumstances.

The Value of Nonprofit Board Service

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Did you know there are more than 1,500 charitable nonprofit organizations in San Luis Obispo County? By law, each of them must be governed by a board of directors.

Serving as a director on a nonprofit board offers valuable benefits to both you and your community. You’ll develop leadership skills, expand your network, and make a meaningful impact on a cause you care about. Your volunteer service ensures the organization stays mission-focused and effective, supporting positive change and enhancing the quality of life in your community.

In the video below, Spokes CEO Michael Simkins addresses members of the San Luis Obispo Chamber of Commerce, sharing deeper insights into the benefits of nonprofit board service—and why it’s a valuable opportunity for everyone. He emphasizes the importance of local employers supporting and encouraging employee involvement, highlighting the transferable skills employees gain and bring back to the workplace.

Interested in serving on a nonprofit board but unsure about the responsibilities and level of commitment involved? Spokes offers a free, live 45-minute online class—Board Service 101—quarterly.

Register for an upcoming live session:

June 10

September 9

December 9

Or, view the following recording of a past Board Service 101 class:

Board Service 101

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Serving as a director on a nonprofit board offers valuable benefits to both you and your community. You’ll develop leadership skills, expand your network, and make a meaningful impact on a cause you care about. Your volunteer service ensures the organization stays mission-focused and effective, supporting positive change and enhancing the quality of life in your community.

Topics in this short introduction include:

Your responsibilities as a director
The three “duties” of a nonprofit director
Finding the right board for you
Typical time and financial commitment

The “E” in DEI

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Many of our local nonprofits have put considerable effort into diversifying their boards of directors. That’s good work toward the “D” in DEI—diversity, equity, and inclusion. Today, let’s give some attention to the concept of equity.

First, let’s differentiate equity from equality. Equity refers to fair treatment, access, opportunity, and advancement for all individuals. Unlike equality, which implies treating everyone the same, equity recognizes that different people have different circumstances and allocates resources and opportunities accordingly. College scholarships based on need are one classic example of equity. The Americans with Disabilities Act is another.

There are numerous visual depictions to contrast the two concepts. I like this one, from Sketchplantations, used by permission.

Removing Barriers

One powerful way for nonprofit leaders to promote equity is to identify and remove barriers. Attorney Heidi Christianson suggests two places to start. One is barrier language. She recommends eliminating “language that feels like ‘legalese’ and processes that are unnecessary. For example, “If Bylaws and policies are to represent an organization’s collective expectations, they need to be welcoming to all people.” In fact, composing such documents in clear, straightforward language may make it easier for everyone to understand and comply with them!

The second is barriers to service. For instance, Christianson encourages us to “think about meeting times, prohibition on board compensation, and length of board terms.” Look at your list of board expectations or your board member job description. Though not intending to, do they automatically put hurdles in the path of board service for some people but not others?

Here are additional resources for advancing equity in the nonprofit board room:

Microaggression

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The Spokes workshop, “Creating and Retaining an Inclusive Board Environment,” addressed two key concepts. One of them, unconscious bias, is the subject of a separate post. In this post, we’ll talk about “microaggression.” It’s something we all can be and probably are guilty of from time to time unintentionally and without realizing it.

The term “microaggression” refers to subtle, often unintentional, actions or comments that convey prejudiced or derogatory messages to individuals based on their membership in a marginalized group. These small, everyday instances of discrimination or bias can be verbal, behavioral, or environmental. Don’t be fooled by the prefix “micro.” Although microaggressions may seem minor, especially to the perpetrator, their cumulative impact can be significant and harmful. And even a single instance can sour a relationship or make a new member of your board feel uncomfortable.

Verbal microaggressions are one example:

  • Scenario: A manager tells a new Asian American employee, “Your English is so good!”
  • Why it’s a microaggression: The repeated interruptions suggest that her contributions are less valuable, reinforcing gender-based power dynamics and disrespect.

Behavioral microaggressions are another example:

  • Scenario: A woman is repeatedly interrupted by her male colleagues during a meeting.
  • Why it’s a microaggression: The repeated interruptions suggest that her contributions are less valuable, reinforcing gender-based power dynamics and disrespect.

Here are some resources for learning more about microaggressions, and how to deal with them when they happen.

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