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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.

Spotlight on Spokes

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On October 8, 2024, Spokes board member Liz Summer and CEO Michael Simkins had the opportunity to talk with long-time radio host Dave Congalton on KVEC’s The Dave Congalton Show. Topics that came up included the difficulty nonprofits are having replenishing their pool of volunteers, efforts to help nonprofits diversify their boards, and how people can get involved with board service. Listen below!

Image used by permission.

Replenishing Your Volunteer Pool

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“Lack of volunteers” is a common theme lately in our executive director/CEO roundtables at Spokes. Currently volunteers are “aging out” and it’s a struggle to replace them. I decided to ask our friend chatGPT about this issue. As usual, it had lots of ideas.

For openers, it provided the following trends that contribute to the situation:

  • Aging Population of Traditional Volunteers: Older generations, especially Baby Boomers, have historically been strong contributors to volunteerism. As they age, they are either reducing their involvement or are unable to continue due to health reasons.
  • Younger Generations Volunteering Less: While Millennials and Gen Z are often involved in social causes, their approach to volunteering is different. They tend to prefer short-term, project-based engagements or virtual volunteering, rather than long-term commitments. Their work-life balance, financial pressures, and busy schedules also play a role in their reduced engagement in traditional volunteering.
  • Shift in How Younger People Engage: Younger generations are often more attracted to causes that align with their personal values and might prioritize advocacy, digital activism, or donating money over volunteering time in a traditional sense. They also prefer organizations that offer flexible, meaningful, and tech-savvy volunteer opportunities.
  • Competition with Other Activities: Younger people have more competing interests, such as career development, social activities, and other forms of civic engagement. Nonprofits may struggle to attract them unless they adapt to these preferences.
  • Lack of Targeted Outreach: Some nonprofits may not have adjusted their volunteer recruitment and engagement strategies to appeal to younger generations, who often rely on social media and online platforms for such opportunities.

Next time, I’ll share some of the suggested approaches for countering this trend.

Can we pay our volunteers?

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We appreciate our volunteers so much. Most of our nonprofits could not begin to provide services without the help of selfless volunteers. It’s natural to want to reward them. But can you pay them something for their hard work?

Frankly, no. California Labor Code has a strict definition of volunteer. It is someone who “performs work for civic, charitable, or humanitarian reasons…without promise, expectation, or receipt of any compensation for work performed.”

It is permissible to reimburse volunteers for necessary expenses incurred in their volunteer work for you. You can certainly have a volunteer appreciation party and treat everyone to some refreshments. Likewise, a token of appreciation such as some flowers, a plaque, or a framed certificate of appreciation is fine.

Just not cash or a check (or even a “cash equivalent” such as a gift card). From the IRS’s point of view, that would be income. From California’s point of view, it could make them your “employee.”

Learn more:

Can you fire a volunteer?

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In a recent Spokes roundtable, the topic of the “dysfunctional volunteer” came up. Most volunteers are valuable assets for or organizations. We couldn’t do what we do without them. But occasionally, we experience a volunteer who is not contributing, or worse, creating a drain on the organization.

There are various forms of dysfunction. A volunteer may promise but not deliver. He may not have the knowledge or skills to be of help. She may distract staff or other volunteers from what they need to be doing.

As with hiring employees, the best approach to recruiting volunteers is to have a sound system for vetting them, learning about their talents and interests, and matching those to the tasks your organization needs accomplished. Sometimes, though, things just don’t work out. For the benefit of both the organization and the volunteer, it may be time to part company.

The following two resources provide sound advice on how to let a volunteer go in the most respectful and productive manner.


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