While it is legal to compensate foundation trustees for routine board service, most foundations choose not to, and field best practices recommend against it. In general families and individuals who set up foundations, generally do so because they want to give back to the community and their participation in the foundation is part of their volunteer activities. Additional reasons they do not compensate include: wanting to spend the money on grantees rather than themselves, holding themselves to the same standard they expect of grantees (volunteer boards with low administrative costs), and desiring to avoid the inherent conflict of interest that arises when deciding ones own compensation.
However, other small foundations believe that modest compensation to board members offers advantages such as, encouraging trustees to take their duties seriously and put in the necessary time, engaging trustees for whom participation would be a financial hardship, and attracting and retaining trustees with a particular expertise, passion, or commitment to the donor’s cause.
If a board decides to compensate for routine board services such as creating or revising foundation policies, overseeing foundation operations, attending board meetings, overseeing investments, etc., the compensation must be reasonable, meaning that which similar persons performing similar tasks at similar organizations are paid. We recommend that member foundations considering compensation consult the Exponent Philanthropy Foundation Operations and Management Survey for comparative data.