Should directors serving on not-for-profit boards be paid for their work? It’s a question that continues to surface quietly in boardrooms, and the answer is rarely straightforward. It goes to the core of how we value leadership, accountability and expertise in a sector defined by stakeholder value and not shareholder return.
For years, not-for-profit boards have operated on a voluntary basis. Joining one was seen as a way to give back, lend professional expertise and support a cause that matters. That sense of service remains a vital part of the sector’s fabric; many organisations continue to thrive thanks to directors who give their time and wisdom freely.
Yet the landscape of governance has shifted. The responsibilities and scrutiny that come with a board role have grown exponentially. Directors now face complex regulatory environments, heightened community expectations, financial and operational risk, and the same accountability pressures as their commercial counterparts – most of whom are paid for carrying out similar duties.
So, is it reasonable to expect the same level of commitment, skill and accountability from unpaid directors? Paying board members does not undermine a not-for-profit’s mission. If anything, it can strengthen it. Remuneration signals that governance is taken seriously, directors are accountable for performance, and that their contribution is valued. It can also broaden the talent pool, attracting experienced professionals who bring commercial acumen, but may not be in a position to volunteer the time required for such demanding roles.
For smaller community organisations, board payments may not be viable. Donors, funders and their community may see these payments eating into their limited funds for service delivery.
Ultimately, there is no single model that fits all. The decision depends on an organisation’s size, maturity, risk profile and strategic ambitions. What matters most is transparency – being clear with stakeholders about the reasoning behind the board’s structure and how it supports the organisation’s mission.
As the not-for-profit sector continues to professionalise, this conversation will only become more relevant.
Sandra has in excess of 30 years recruitment and consulting experience within the Health and Human Services sectors across Australia, and internationally in New Zealand and America. She complements her consulting career with industry experience where she worked in a senior Human Resources Leadership role in a major teaching hospital in Boston. Well known for her consultative approach, Sandra has developed a reputation as a leading industry specialist, having placed a range of CEOs and senior executives across the sectors and facilitated initiatives including talent acquisition, talent management and organisational excellence. Read more…
