Nonprofit Q&A

A service of Jeane Vogel and Fund Raising Innovations

May 24, 2004

 

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Here is this week’s question:

The following questions came up at our recent Exec Committee meeting.  We're hoping you might have the answers:

 

1. As the artistic/executive director, can I actually serve on the Board and vote or am I an ex officio member of the Board or a non-voting member or what the heck am I ?

You're overworked, underpaid and unappreciated. Oh, wait. You knew that already, didn't you?

 

You're an ex officio member of the board. During executive sessions you should leave the meeting unless your presence is specifically requested. Laws vary from state to state and you should check with your lawyer, but most commonly an executive session can be called to discuss personnel issues, litigation and real estate matters. You don't have to go into executive session for these reasons, but you probably should to protect yourself, your employees and your interests.

 

Also, I'm assuming that you are a salaried position. As such, you cannot be paid and be a voting member of the board. You can forgo your salary and vote, but I don't think the tradeoff is worth it!

 

2. If we were lucky/blessed and found someone who was not on the Board who was willing to help us on the financial side of the business, could they get a tax deduction for this work?

 

No. Pro bono work is not tax deductible, but any supplies, mileage, expenses, etc., as part of the work is tax deductible. All professionals are expected by their profession's code of ethics to do pro bono work. You need to check with your CPA or tax attorney for a answer, because I am neither. I can tell you that the IRS has been scrutinizing in-kind gifts very closely, so document all in-kind contributions carefully and prepare a receipt for all donations -- cash, securities, real estate, and in-kind -- over $250. You should be doing that for all donors, of course, but you are responsible for maintaining records for contributions over $250.

 

The most common way to get these types of professional in-kind gifts is to accept and pay an invoice for the work at fair market value, then have the professional donate that amount of cash back to you. The benefit for you is that you will know what you need to budget for the professional work and you can put it in your budget. You'll probably have to pay for it someday.

 

The professional donating the "work" will be paying taxes on the income but will get a deduction for the donation. It's a bit of a hassle so most professionals just do pro bono work. But be careful. Pro bono work is performed by volunteers, who often are undependable or put your work last. Sometimes you do get what you pay for. You have more control as a client if you pay an invoice, even if the money is donated back.

 

Also, board members should not profit from their board membership. You have a conflict of interest policy, right? For example, a CPA who volunteers shouldn't have his firm engaged to perform an audit for fee, even reduced. Though reimburses expenses is ok.

 

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© 2004 by Jeane Vogel and Fund Raising Innovations

 

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