Should You Ever Cover Board Member Expenses?
By: Joan Garry
Principal and Founder, Joan Garry Consulting
When my wife ran The Food Network, she often got 911 calls during Thanksgiving week.
“Eileen, do you brine your turkey?”
“What’s your favorite stuffing recipe?”
It was actually hilarious. Eileen is a very good cook mind you but she would respond to all callers the same way. “I am not a chef; I make TV shows.”
As for me, I get more than my fair share of 911 calls. Some folks expect me to be an accountant, a human resources professional and oh my, lots of folks ask me for legal counsel I can’t and have no business providing.
But a former client called 1-800-JOANHELPME (not a real number, don’t actually call that) last week and asked me a really good question.
I thought many of you might have this same question and would benefit from knowing my point of view.
Ready? It’s this.
What board member expenses should nonprofits pay for?
GREAT question! Here’s my answer…
WHAT BOARD MEMBER EXPENSES SHOULD NONPROFITS PAY FOR?
This could be my shortest blog post ever.
Here’s the answer: NOTHING.
Zero, zilch. nada, zip, squat, jack, bupkis.
I hope you found this helpful.
OK OK, there is more…..
WHAT BOARD MEMBERS THINK THE ORGANIZATION SHOULD PAY FOR
Here are seven board member expenses I came up with but please do add your own in the comments below. I am convinced I forgot a whole bunch.
- Travel to board meetings
- Tickets to any/all organization conferences / events
- Travel to any events / conferences in the sector
- Lunch / Coffee / Breakfast / Dinner with the Executive Director
- Drinks with a group of staff members to show appreciation
- The credit card % fee on their annual gift
- Their professional services
SHOULD YOU EVER SAY YES?
Actually, yes. There are two situations where expense reimbursement feels warranted.
1) When the board member is serving a staff function
If you need organizational participation at a conference or event and have budgeted for a staff member to attend and that staff member is unable and a board member is willing, you should offer to cover any expenses. The reasoning is the board member is doing staff work you budgeted for.
2) Special circumstances
An organization should have a budget line item for “Board Related Expenses”. This would include funds for food, printing supplies, etc., as well as some money to help (on a case by case basis) underwrite a board member’s ability to attend a meeting. Unfortunately, there will be times of hardship for board members and the organization needs to stand at the ready to support that individual. But please be sure there are clear criteria for the circumstances under which these funds can be used and the board chair and the Executive Director should be on the same page.
HOW TO SAY “NO” WHEN A BOARD MEMBER WANTS REIMBURSEMENT
This was the question my caller asked. She thought it was inappropriate to cover a board member’s travel to a board meeting but a) wanted my opinion and b) wanted my advice on how to address it diplomatically.
So here are a few sample situations I bet many of you have encountered:
1) The Lingering Check (covers breakfast, lunch, drinks etc.)
E.D. and board member are having lunch. Does not matter what the topic is. And it doesn’t matter who initiated the invitation. Don’t let anyone tell you otherwise.
Even if you are the E.D. and you asked for the lunch date, do not grab the check! The check needs to sit right there. Center of the table. In fact, point to the center of the table to illustrate the placement you prefer. And let it sit. Just before it becomes really really uncomfortable, the E.D. should just pick the damned thing up. But it is the awkward few minutes when it just sits that should communicate a message.
2) The Comp Tickets
OK, so calm down. You know it’s your biggest fundraiser and so does every member of the board. But there are always exceptions right? WRONG. A board member calls: “I have a great prospect who has incredible capacity and he told me he wants to come. I can’t ask him to pay – I never mentioned that – we can comp him, right?”
Set expectations up front. In the event budget, show the very teeny tiny amount you have allocated for comps and how you expect to use them. Make sure the words ‘board members’ do not escape your lips.
Another way to approach this. “Bob, do you know how many requests our staff has gotten just today alone asking for comp tickets!?” (you might have gotten zero calls but a little white lie is super helpful here). “If I said yes to every one of them, you all would fire me for running a fundraiser that raised no funds. All the requests have some validity but I have to be consistent with everyone.”
3) Board Meeting Travel
See “Special Circumstances” above. All other requests should be addressed per #2 above. Core message: we did not budget for this. It was in the orientation package you received and part of the board obligations contract you signed. (See ‘Preemptive Strike’ below.)
4) Credit Card % Fee
So your board member makes a $5,000 pledge and charges it to her Chase Sapphire Reserve card because she is trying to get enough points for the upcoming first class flight to Bali. Wonderful!
But this $5,000 will actually cost you 1-3% in credit card fees. If this is not something you have preempted (see ‘Preemptive Strike’ below), just calmly educate the board member. Be sure that you can’t wait to get a postcard from Bali and make a request that the board member increase the gift by that credit card % so it nets out to $5,000 for the organization.
Most board members really have not thought about this and will get it and will never have to be reminded. The ones who don’t – well they don’t get it. Might not ever.
THE BEST SOLUTION IS THE PREEMPTIVE STRIKE
Get out in front using these three tools.
1) Board Orientation / Member Contract
Make it clear as day what financial obligations board members have. Really clear. Encourage them to make pledges with credit cards to build their point inventory and explain the ‘round up.’ I would also add something about staff meals – honestly I believe that some thoughtful education will eliminate the vast majority of ‘lingering checks.’
2) Organizational Budget
Don’t gloss over the line item for “Board Expenses” – they will think that is all about board meeting expenses. Be really clear about the assumptions about board member expenses that are (and are not) in the total budgeted amount.
3) Event Budget
Make the comp thing stick out like a sore thumb. How about this as an expense line:
Complimentary Tickets: $0.00
And then take time to use the messaging under item #2 above.
Many board members will get on board (pun intended) once they understand. Some won’t. These board members will disagree and you’ll have to deal with it or live with it.
But at the end of the day, board members should not cost you money. Seems like a pretty obvious thing to say, eh?
Ok, so what am I missing? Do you disagree? Should any other board member expenses be covered? Let’s get at it!