As you might know by now (if you regularly peruse this blog) one of my "issues" with NANOE, this nonprofit focused on redesigning nonprofit boards, is the organization's insistence that paying board members for meeting attendance has issues. At minimum I wonder aloud, that volunteer board members should certainly have other incentives for meeting attendance than pay (noting this is not about reimbursement for reasonable expenses).
But the National Rifle Association, this is a different story. As a Washington Post story has highlighted, the NRA contracts with a good number of the board members. Specifically, "18 members of the NRA’s 76-member board, who are not paid as directors, collected money from the group during the past three years, according to tax filings, state charitable reports and NRA correspondence reviewed by The Washington Post." Again, I will not discuss further what I believe to be a ridiculously-sized board (although, to each their own, if you can manage it), but even 18 members who have received payments for services or products strikes me at minimum a questionable practice - one maybe should ask why the remaining 58 board members aren't compensated for their services or products.
Ah, but I digress. The real question: when and is it ok for a nonprofit to buy services from board members and if yes, how much can these purchases be construed as "buying" member "votes" and is there a limit that affects this ok-to-do activity.
Back to the Post, services and/or products are purchased "from about one-quarter of board members, the extent of which has not previously been reported, deepen questions about the rigor of the board’s oversight as it steered the country’s largest and most powerful gun rights group, according to tax experts and some longtime members. The NRA does not require board members to donate or raise funds for the group, as many nonprofit organizations do. They do not have term limits. State and federal laws DO allow members of nonprofit boards to do business with their organizations under certain guidelines. The Internal Revenue Service can impose penalties if top officials and their families receive economic benefits that exceed fair market value. BUT, tax experts said the numerous payments to certain NRA directors create potential conflicts of interest that could cloud the board’s independent monitoring of the organization’s finances.
So, can nonprofits purchase services and products from board members: sure. Is it always a good idea? Not necessarily although the correct answer: it depends.
The NRA defends its practice stating that its members have special skills not otherwise available - that's why they are at the board table. Maybe?