2017-12-05 00:00:00 Nonprofit Organizations English Decide whether or not your nonprofit organization should require financial contributions from its board members. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/Board-Member-Upset-Required-Donate.jpg https://quickbooks.intuit.com/ca/resources/nonprofit-organizations/should-board-members-donate-money/ Should Nonprofit Board Members Be Required to Donate Money?

Should Nonprofit Board Members Be Required to Donate Money?

2 min read

Fundraising is vital to the sustainability of nonprofit organizations. Ways to secure funding range from creating a Kickstarter campaign to reaching out to the community, but sometimes the best source of donations comes from within. Nonprofit board members typically contribute personal funds as well as their time and talent to the organizations they serve. Sometimes this practice is even mandatory. The topic can be divisive, as some board members are vehemently against it, while others wouldn’t have it any other way.

Why Mandatory Donations Make Sense

Asking for donations from board members is beneficial because it signifies true dedication and commitment to the organization. Some board members believe that if you’re not willing to make a relatively small yearly contribution, your heart isn’t really fully in it. Board members with a monetary stake in the organization are more likely to strive for success. Money is a powerful motivator, even for people involved in nonprofits. When board members donate, they become more involved and entwined in the organization, rather than sitting on the sidelines as spectators.

Board member donations also create a sense of unity because they indicate that board members are all working towards a common goal. Some major donors and foundations won’t even support a charity organization unless the entire board contributes. An organization with non-contributing board members simply leaves a bad taste in their mouths. After all, if the people running the nonprofit aren’t passionate about the organization’s cause and mission, why should non-board members be committed to it?

Problems with Requiring Contributions

Downsides also exist to requiring monetary contributions from board members. Some feel that requiring donations removes equality from the board, as members with limited income may not be able to afford even the minimum required donations. In some cases, their inability to contribute financially may even prevent them from maintaining or receiving a seat on the board. A contribution that seems small to one member might be a major expense for another. Those who are against required contributions to nonprofits often cite the time, effort, and talent contributed to the organization as payment enough.

Some board members who oppose required donations also believe that keeping board money out of the organization encourages a more nuanced decision-making process that’s not influenced by personal gain. If the board needs to make a touch decision, it may be difficult for someone heavily invested in the organization to make an honest judgment call that benefits the organization as a whole over the individuals involved.

Making a Choice

Finding a compromise between requiring donations and making them optional can be tough. One approach is to require donations, but make them low enough so that no one is hurt financially. Another option is to take a vote, and let the majority decide. Make sure everyone on your board voices their opinion, and then have a polite, honest discussion. Every nonprofit is unique, so there is no one-size-fits-all solution. Arguments for and against requiring board members to make financial contributions to the nonprofit they serve are equally valid, and each nonprofit must make its own decision.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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