NFP Board Remuneration Still Contentious – Report
Wednesday, 7th December 2016 at 10:17 am
Almost 14 per cent of not-for-profit board members are currently receiving remuneration for their services – a drop from a high of 17 per cent in 2012/13 – according to a new report.
According to Better Boards latest Board Remuneration Report the most commonly reported sectors which provided board payment were aged care (33 per cent), community services (9 per cent), disability (9 per cent) and housing services (9 per cent).
The report found the most commonly reported amount of remuneration for a single board member in an average year was between $10,000 and $30,000, with 37 per cent of respondents in this payment range.
Another 33 per cent of organisations reported that their board members were paid less than $5,000 a year. Another 30 per cent reported board members were paid between $5,000 and $10,000 in an average year.
In cases where only selected board members received payment, the organisation paid either the president, chair or treasurer or two of these positions.
The report said in one case it was reported that the president of one organisation alone was paid $40,000 per year.
Lead researcher Julia Duffy said the issue of remuneration was still a contentious one.
“Many organisations and individuals in the not-for-profit sector are either strongly in favour of, or opposed to, paying board members in positions that have traditionally been voluntary,” Duffy said.
The survey found a drop in paid not-for-profit board directors from a high of 17 per cent in 2012/13 to 13.9 per cent in 2016.
The report found that organisations that remunerate their boards were more likely to have a high annual revenue. Respondents from non-remunerating organisations most commonly reported that the “financial” factor had the greatest influence on the board’s decision not to pay directors (17 per cent).
Duffy said although many respondents argued either for or against remuneration, many others reported that they were undecided on the subject or felt that remuneration was only suitable in specific circumstances or on a case-by-case basis.
“Given that remuneration is such a controversial issue in the not-for-profit sphere, it is unsurprising that many respondents were passionate in their responses to this question,” she said.
“Many of the worded responses indicated that respondents supported the idea of remuneration or would like to be remunerated but appreciated that their organisation was not able to, or that the other board members did not support remuneration.
“It is interesting to note the differences between those who personally supported remuneration (38 per cent), the number who would encourage their organisation to introduce remuneration (27 per cent) and the number who reported that their organisation was actually considering introducing the policy (9 per cent).”
The survey also found that some non-remunerating boards did pay a form of compensation and payment for out of pocket expenses.
“A number of other practices are closely linked to remuneration and are also worthy of investigation. In preparing this report, Better Boards sought not only to uncover more information about board remuneration in not-for-profit organisations, but also to measure the incidence of related practices such as board assessment and reimbursement,” Duffy said.
More than half of the directors from non-remunerating boards (56 per cent ) reported that ongoing professional development or education had been paid for by the organisation and 14 per cent of organisations reported that a board member had been paid for other work they had performed at the organisation, such as consulting or legal advice.
Duffy concluded that the change from 2012/13 report was not enough to claim a statistically significant shift in the incidence of remuneration.
“Nevertheless, the number of board members from non-remunerated boards who indicated that they support the idea of remuneration in general, or in the future for their specific organisation, indicates that there may be future growth in this area, especially where organisations are able to grow and develop greater financial resources.”