Nonprofit Board Compensation: When Should Board Members Be Paid?
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Should our nonprofit’s board members receive compensation?
The topic of nonprofit board compensation continues to generate significant discussion among nonprofit leaders. While many organizations have traditionally relied on volunteer boards, growth and increased complexity often require a more structured and professional approach to governance.
Determining when to compensate board members depends on the organization’s size, maturity, and operational demands.
When to Introduce Nonprofit Board Compensation
For smaller or grassroots nonprofits—especially those without staff—board compensation is generally not appropriate. However, as organizations expand, expectations placed on board members increase.
Nonprofit board compensation becomes more relevant when:
The organization has grown significantly in revenue and operational complexity
Board members are expected to provide specialized expertise
There is a need to attract and retain experienced professionals
The nonprofit has reached a stage of long-term maturity, such as milestone anniversaries and sustained growth
As a general guideline, organizations operating in complex environments may consider compensation when revenues exceed $1 million, or $3 million in less complex settings.
Aligning Compensation with Organizational Growth
A practical approach is to professionalize staff first and the board second. Once a nonprofit has established a strong staff structure, it should consider formalizing board expectations—including compensation—within a few years.
Introducing nonprofit board compensation can help signal a shift toward stronger governance, increased accountability, and clearer role expectations.
Managing Costs and Compensation Models
Historically, nonprofits often reimbursed board members for travel, accommodations, and meals. However, many organizations are now adopting more cost-effective approaches.
Common options include:
Providing a per-meeting honorarium set by board policy
Hosting virtual board meetings to reduce travel expenses
Establishing clear policies to control and predict costs
These approaches help balance financial responsibility with fair recognition of board contributions.
Increasing Accountability and Performance
One of the key advantages of nonprofit board compensation is the ability to establish higher expectations for board engagement.
Compensated boards can more effectively enforce:
Attendance and participation standards
Time commitments and preparation expectations
Committee involvement and performance measures
This shift supports a more disciplined, accountable, and high-performing board.
Nonprofit board compensation should be considered as organizations grow in size and complexity, helping to strengthen recruitment, improve accountability, and support more professional governance practices.
