Is it inappropriate for the Board Chair to give an executive director money?
Dear Rita in HR:
I am the executive director of a smallish nonprofit ($250K annual budget). My salary is low compared to other executive directors, but I believe in the organization’s mission and I have great working conditions.
However, the board chair seems to feel badly that the organization cannot afford to pay me more and sometimes gives me large financial gifts from his own pocket. When this first happened, I thought it was an isolated incident, but I was just tipped off by a mutual friend that he is planning to give me another large gift soon.
I feel extremely uncomfortable about this. He prides himself on being generous and would be very hurt if I refused it.
I agree that it is inappropriate for the Board Chair to give you money.
With a little finesse and maybe one slightly difficult conversation, I think you can turn this into a “win” for your nonprofit.
Ask the Board Chair to meet with you in person – difficult conversations are always better face-to-face. Begin by thanking him for his commitment to the organization and his Board service. The best way of avoiding hurt feelings is to be direct, so come to your point quickly.
Explain that you cannot accept any direct financial contributions from him. If your nonprofit has a Conflict of Interest policy, explain that the “gift” likely runs afoul of that policy. If you do not have such a policy in writing, you can still explain that a direct financial contribution undermines the financial transparency that is necessary for Board management.
The Board needs to understand your total compensation package, and a cash payment to you would undermine that transparency. If he resists or seems hurt, give him an example. What you were giving your employees cash directly? That probably wouldn’t go over well with the Board.
If he wants to support increased pay, the best way to do that is by contributing directly to the nonprofit, and advocating for increased pay for you with the other Directors. Perhaps he would consider making the “large gift” directly to the nonprofit.
That way you aren’t refusing the gift, you are just redirecting it. You can also ask him to become more involved in fundraising, as an overall increase in revenue would help justify increases in compensation.
Your nonprofit should have a written Conflict of Interest policy that Board members review and acknowledge annually.
If you do not currently have such a policy, this is a good time to implement one.
About the Author
Siobhan Kelley is an Employment & Labor Risk Manager at Nonprofits Insurance Alliance, a sponsor of both American Nonprofits and its magazine, Blue Avocado. Siobhan is one of the employees of the Group who provides free employment risk management consulting services to their member-insured nonprofits.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.