A common question we receive at Foundation Group is:
If we have 4 board members, how many can have a salary? Is it two or one?
A majority of the board must have no financial interest in the organization it is governing to ensure arm’s length decision making in the public’s interest. There are several ways in which a board member could have a financial interest.
- Being hired as an employee
- Being contracted as an independent contractor
- Leasing or selling property to the organization
- Having their for-profit business contracted for services
- Having a relative meet any of the above
In each of these instances, the interested board member must recuse themselves from the vote to determine if the arrangement is in the best interest of the organization. The majority vote of the remaining board members will make the determination, unless a greater majority is required in the organization’s bylaws.
In the situation asked above, only one of the four board members could have a financial interest.
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