Should you compensate board members?

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I know that the board members of a homeschool groups are hard-working people.  They not only homeschool their own children, but they organize support groups and co-ops to help other homeschool families.  Sometimes a homeschool group would like to “reward” these generous individuals.

Is it OK to compensate your board members?

A homeschool co-op in the Midwest contacted me recently to apply for 501c3 tax exempt status.  The Treasurer told me that her co-op had been paying their leaders anywhere from $200-$1,200 a year for their service on the board.  I discussed why paying board members was not a typical practice.  Here is some of what we discussed:

  • Payments to board members can create a conflict of interest. Does the loyalty of the leader lie in herself or in the best interests of the group?
  • Paying board members can call into question the duty of loyalty of the board member.  Is she acting in the best interest of the group rather than a personal, financial interest?
  • Payment could compromise the leader’s duty of care. A leader should act in good faith, with the care an ordinary, prudent person would exercise and with the best interest of the group in mind.
  • Payments on nonprofit boards is not a typical practice.  Charities do not usually compensate their board members. Their funds usually go back into the program. Board members serve because they have a passion for the mission and a concern for the members.
  • Board payments can undermine the volunteer spirit of other members. Why should a member volunteer her time when others are paid for their efforts?
  • Paying a board member can cause dissension and a sense of injustice or imbalance in the group.
  • In this particular case the payments did not have member approval. The board voted themselves compensation, but never put the idea to a member vote. This could be considered inurement  which is forbidden for 501(c)(3) tax exempt organizations and could put the organizations tax exempt status at risk.
  • Paying board members involves correctly classifying them as employees or independent contractors. The classification is a matter of IRS law, not your choice.

This group has wisely decided to stop payments to board members. I think the group will be better served by an all-volunteer board and healthier in the long run.

payingworkerscoveroutlinedYou can pay board members, but the income is taxable income. My book Paying Workers in a Homeschool Organization explains the correct way to pay board members as employees or independent contractors and alternative tax-free ways to thank your hard-working board members.

Carol Topp, CPA

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Conflict and Leaving a Homeschool Group

We have a situation where a mom feels her teen daughter is being “left out” by the other girls in the class.  It “hit the fan” yesterday when the mom yelled at one girl to leave the class, threatened that the other girl was next.

How does one get to the bottom of this? The family who has the child who was yelled at would like to quietly step down and leave the group. She’s been involved for 5 years -I’d be heartbroken to lose them!

All with only 2 weeks left of the quietest, smoothest co-op year ever!
Oh, help, help, help!
Lisa

Lisa,
Sounds as if a lot of  emotions and hurt feelings rose to the surface.

I wrote an article on Conflict in Homeschool Groups. You may read the entire article at Heart of The Matter Online. Here is part of what I say in the article:

Confession and Reconciliation

Some offenses are too large to be overlooked, perhaps because a relationship has been painfully damaged. In this case, confession and reconciliation between parties is needed. Reconciliation is gently restoring the relationship and it may involve confession on someone’s part. Each party needing reconciliation should ask themselves,

  • Have I said something unkind?”
  • Have I gossiped about the person or problem?”
  • Have I tried to control others?”

Confession to the other party maybe necessary in order to restore a relationship. Reconciliation isnot merely confrontation; it is restoring a relationship. Remind members to ask for God’s wisdom and a gentle spirit before they approach the other party. Each party should aim to be clear and specific.

Merely complaining about another’s behavior rarely helps a situation. The goal is restoring a relationship, not blaming or accusing others. Members should use “I feel” statements such as “I feel like a scolded child,” to explain the hurt feelings a member may suffer.

Using creativity through stories to make your point can be very helpful. An excellent example of using stories comes from the Old Testament prophet Nathan in II Samuel Chapter 12. He had the unpleasant task of confronting King David with his sins of adultery and murder. Nathan wisely used a story of a poor man with only one lamb to help David see his own greed.

I used The Peacemaker: A Biblical Guide to Resolving Personal Conflict by Ken Sande.  It’s a GREAT book and highly recommended. The Peacemaker.net website has some helpful articles from Annette Friesen, their Homeschool Advisor. Search on “Homeschool” and you’ll find an article titled Preparing Homeschoolers for Conflict.

Mrs Freisen says that when a person is offended, (and several people were offended in your situation) they desire three things:

1. An apology
2. Restitution if applicable
3. Reassurance that it won’t happen again.

I think you should work on #1 with the parties involved and perhaps the board could work on #3 if policies are needed.

BTW, I discuss conflict in my book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out and have several sample conflict resolution policies that other homeschool groups use.

I hope that helps!

Carol Topp, CPA