> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI

The Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.

I was recently invited to join the board of my son’s school. The gist of this invitation email was that there would be a fairly significant time commitment in the form of regular board meetings and committee work, and that in addition to this time investment, “As with all non-profit boards, it is expected that every member of the board will support fundraising, and give a donation themselves.”

I spend much of my time at work on governance topics and am therefore fairly well-versed in the trials and tribulations faced by boards. However, when I personally received an invitation, I felt, in my humble opinion, that this is an absurd request.

What kind of proposition is it to be asked to sacrifice your highly coveted personal time and in return to also be expected to commit your hard-earned money. Could you ever imagine a job where you were asked to pay your employer for the privilege of committing your time and energy to working with them?

That said, there are millions of non-profits in the world and most of them have some sort of governance structure so obviously people do commit their time, energy, and money to non-profit board service. This disconnect got me thinking about why anyone would ever join a non-profit board. What are the incentives? Here are some of the reasons I came up with for why I would consider accepting an invitation to be a board member at a non-profit:

  1. I felt very passionately about the cause.
  2. A close friend or relative asked me.
  3. I had a vested interest in the work of the organization.
  4. I was flattered to be asked to provide my wisdom/guidance.
  5. There was some prestige, resume building, or additional perks.
  6. It would be a good opportunity for networking or may lead to a future job.
  7. To meet some like-minded people.

The problem with most of these reasons – with the exception of being passionate about the cause – is that they are generally considered governance no-nos. Number two and three would be nepotism and related-parties, respectively, both of which are frowned upon governance practices.

Reasons four through seven, although not directly in opposition with any governance best practices, are not the rationales that would make for good boards as they are all superficial and self-interested incentives. Superficial and self-interested reasons don’t strike me as the best way to attract high quality individuals ready and willing to put the effort, thought, and dedication into this role that is needed for a high functioning board. Boards should be made up of individuals with a diversity of backgrounds, expertise, and experiences who are willing to put in the time, stay actively engaged, and are ready to ask the hard questions about strategy, mission, risk mitigation, and so on.

Perhaps I am missing some of the incentives for why individuals would offer both time and money to join a non-profit board. If I am, I hope you’ll comment with additional reasons I missed. It still seems like there is a major disconnect between the incentives individuals have to join a non-profit board and the needs that board has to execute its governance role well. The odds that the bulk of non-profit board members are operating solely or even mostly on passion for the cause, to me, seem low.

As with anything, you get what you pay for. Maybe it is time for more non-profit boards to consider remunerating their board representatives for their service in order to ensure they can attract the caliber and composition of board members they need. After all, within our organizations, we do pay our staff in accordance with the demands and importance of their positions.

Image credit: matt_e

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