Can our all-volunteer charity pay board members for time-consuming non-board duties on behalf of the organization? Should we? We are located in British Columbia, and our issue involves extensive consultation sessions with the provincial government.
Normally, minimum ethical standards include legality, except in those very rare cases where an unjust law is being challenged and an urgent situation is involved. Legality includes federal and provincial requirements as well as your bylaws. I am not aware of any legal restrictions under federal law. In Ontario and British Columbia, lawyers tell me that provincial laws do forbid payments to charity board members, other than reimbursement of expenses. Charities Bulletin #4 of the Office of the Public Trustee says:
“To avoid the appearance of conflict of interest, in general, a director or trustee should not transact business with the charity or accept any personal benefit from the charity.”
In Ontario, there is a legalistic process to request authority to pay board members from the Public Trustee by Court Order or through regulations of the Charities Accounting Act. I understand approvals are sometimes given if highly specialized expertise is needed only occasionally (that is, not often enough to include in an employee’s duties), or the few people with the expertise would not be interested in becoming employees. It helps if the service is offered below market cost. I am not familiar with the details in B.C.
The Canadian charity bylaws that I see usually refer only to reimbursement of expenses, and time does not qualify as an expense. So I suspect the legal side to the answer may involve both an advance government approval, that is by no means a given, and a bylaw change. But you should seek legal advice from a nonprofit specialist in your province. You certainly should not be paying now if you have not done the research and taken the required actions.
If the question involved duties that would be done by staff if you had any, then the simpler solution is to pay someone who is not a board member for these duties. Let the board members focus on board work and hire someone for part-time work, or fee-for-service work. Association management companies are set up to handle many of the administrative functions of a nonprofit, including answering a dedicated phone line, keeping the member database, handling event registrations, and doing mailings. Some provide higher-level services as well. They have the right software, equipment, and people set up to serve dozens of organizations, so it can be much more efficient than most part-time arrangements. However, these are for-profit companies so the cost may be higher, or seem higher at first. Nevertheless, freeing up the valuable time of board members for more board work is worthwhile if you can afford it.
In your case, the province is seeking consultation with community leaders. That cannot really be outsourced or given to an administrative level employee. Perhaps the request even specifies board members. However, it is unlikely they would refuse to include someone with a title like Chair, Public Affairs Committee. Subject to the details of your bylaws, that person does not need to be a board member. A board member might prefer to resign from the board and focus on this activity. That way, they avoid board work such as reviewing financial statements! And as far as I know, there would be no legal restrictions on paying a per diem for meetings that require them to take time off work, if they still felt that was needed and if your funds allow. Perhaps if one person did all the consultations, you could choose someone who has a more flexible work schedule. If applicable, related costs such as day care or transportation could be covered as expenses without legal considerations. Or you could try to recruit such people to the board in future.
Of course, a person being considered for a per diem would have to fully remove him or herself from any related board discussions, and have a conflict of interest declaration recorded.
Any payment would raise another research issue as the person might be considered a consultant lobbyist subject to the Lobbyist Registry. I think that would be avoided if the person only responded to requests from the government for comment and advice, but again I am not a lawyer and not based in B.C.
Speaking of responding to government requests, remember that your input is valuable to the policy drafters and decision makers. Have you considered getting together with your colleagues at other nonprofits and demanding evening or weekend meetings? It is better to inconvenience a couple of civil servants than twenty community volunteers – and your elected representatives would likely agree if you made them aware of the problem. You are certainly entitled to get the agenda and questions in advance, to decide which sessions are worth attending in person. Often, written submissions can be made instead, and may be more effective on complex issues.
Overall, regardless of laws, public opinion is against having charity directors profit from their role. Donors are not happy to hear that donations and other assets are being used to pay people they perceive as volunteers serving a cause. Other volunteers may wonder why one type of work is reimbursed and other work not. A treasurer of an all-volunteer nonprofit, for example, may put many dreary hours into maintaining financial records, depositing monies, and creating reports. One type of payment may set a quite undesirable precedent.
A charity that pays its volunteers, no matter how good the reason, should prepare for a backlash and be prepared to explain how the monies are a wise investment in the mission.
Since 1992, Jane Garthson has dedicated her consulting and training business to creating better futures for our communities and organizations through values-based leadership. She is a respected international voice on governance, strategic thinking and ethics. Jane can be reached at jane@garthsonleadership.ca.
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Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.
