Although it is legal to have board members that are also paid as employees, it is often not in the best interest of the nonprofit and can lead to potential conflicts of interest between the person’s duties to act in the nonprofit’s best interest as a board member and his or her self-interest as an employee. For this reason, the vast majority of board members of charitable nonprofits serve as unpaid volunteers, and many nonprofits expressly forbid board members to serve as employees. Still, board members are normally reimbursed for any direct expenses they sustain on behalf of the nonprofit.
If a board member works as an employee, then it is important that he or she compartmentalizes both of the roles and can easily switch hats without creating a conflict of interest. When acting as a board member, he or she must stay focused on high-level governance and not let his or her interests as an employee conflict with the obligation to promote the corporation’s mission. Other employees often have a tendency to defer to the board member-employee’s opinion, even on matters outside the scope of board duties.