Dear Ask the Experts:
I'm getting my new non-profit off the ground, slowly but surely.
My question has to do with allowable and typical board compensation. Is it legal/common to offer a commission to board members, as well as employees, based on the donations they secure on behalf of the foundation?
My thought is 0.5% or 1% commission, paid semi-annually. I thought this would provide strong incentive for everyone to secure donations for the organization's programs, while providing some marginal benefit to them for doing so.
Having never done this before, I'm wondering if this is typical for non-profits and is it allowed by the IRS? I contacted them as well, but you're more likely to answer in a timely fashion!
Thanks in advance for your help.
Our understanding is that paying nonprofit directors is NOT legal. Paying board members to bring in money is also questionable. In the field of fundraising, it is certainly not a best practice.
Donors would be most unsettled to discover a hunk of their donations was going to a boardmember rather than to the organization. Transparency should be a part of the equation.
You should check with your state's Attorney General, and/or a "legal eagle" in your own state who works in and understands nonprofit law. Do not do this without making those calls!
Editor, Ask the Experts