Can an employee serve on board of directors? Yes, but with important considerations. It is common for a CEO or executive director to be a board member. Board directors have a unique legal status. They clearly perform a “service” but aren’t employees. In most states it’s legal for paid staff to serve on governing boards. But it’s not considered good practice, since it’s a conflict of interest.
Your by-laws should describe a process by which a board member can be removed by vote, if necessary. For example, in some organizations a member can be removed by a two-thirds vote at a regularly scheduled meeting.
In many states, nonprofit members can be appointed by third parties. Some organizations provide for reserved powers or super-majority votes to balance competing interests.
When you are paid a nonprofit salary, you are less likely to burn out. An individual can serve as both President and CEO but most laws require one person be designated President.
Board compensation can lead to IRS audits. Most members are unpaid volunteers. Common 501(c)(3) rules are:
- not a paid employee
- committed to the mission
- volunteer time monthly
There are no laws barring elected officials from nonprofit boards but “conflict of interest” provisions may affect things.
On working boards, members participate in programs, fundraising and administration. Whether the board employs staff depends on the nonprofit’s size.
Board terms typically last two to five years. Governance differs from management.
The board oversees the CEO but a chair isn’t above other directors. Effective boards balance this relationship.