Traditionally, service on the Board of Directors for a community association has been carried out on a completely volunteer basis, with the Board members’ only reward being the sense of fulfillment they receive from knowing that they are providing a valuable service to their community. But increasingly, some community associations are finding that this altruistic reward is not enough to keep the open spots on their Boards filled. For such associations, the question of whether it is permissible to offer compensation to Board members for their service may understandably arise.
There is no law in Georgia that prohibits a member of a Board of Directors of a non-profit corporation to be compensated for his or her service. That said, the By-laws of most community associations do prohibit the Directors from receiving any form of compensation for their service or only permit it if it is approved by a majority of all of the members. Notably, for the purposes of By-laws provisions governing Board member compensation, the term “compensation” means not only a cash payment for service, but any form of compensation at all, including a waiver of assessments.
For those associations experiencing difficulty in finding members willing to volunteer their time to serve on the Board, it may be worthwhile to consider whether offering some form of compensation for service on the Board is in the association’s best interest. The type of compensation offered may vary from community to community based upon each community’s individual needs, and can range from tokens of appreciation, such as restaurant gift cards, to paying the Directors a set monetary amount each year. In order to make sure that Directors earn their compensation, some associations choose only to pay compensation to Directors at the end of their term of service. Note that most association documents require that every member of the association pay assessments, so most associations cannot “waive” the assessments applicable to Board members; however, the association can choose to pay them an amount equal to the annual assessment.
Importantly, however, if your association’s By-laws are silent or currently prohibit Board member compensation, they will need to be amended before your association offers any form of compensation to a Board member. Since the payment of compensation is subject to potential abuse, the decision to permit compensation or the amount of the compensation should be carefully considered and should not be left to the Board members. Rather, an amendment to the association’s By-laws should be adopted by a vote of the members that either requires the membership’s approval of the amount of the compensation or limits the amount to the total amount of the annual assessments imposed against all owners. Without that built-in limitation, the Directors would be free to compensate themselves at whatever rate the majority of the Directors determined, which could lead to abuse of the compensation provision and attract Board members who do not have the community’s best interests in mind. And, after all, while offering some form of compensation may help to attract members who otherwise would not have considered serving on the Board, a primary motivation for a member serving on a community association Board should always be a desire to make the community a better place, and not solely for personal monetary gain.
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