Should I start by serving on a not-for-profit board?
The short answer is it depends on three key things:
- Your career stage: Women at early, mid or later career stages have different reasons for seeking to serve on boards, from wanting to give back via an NFP to being involved in innovative start-ups or early-stage companies through to those looking for a full-blown board career.
- Where you work: Many companies will only allow their employees to serve on NFP boards and any remuneration must be forgone either back to the NFP or the company.
- Where you want to end up in your board career: How you position yourself at the outset can influence the opportunities that come your way on boards. This is also impacted by your level of seniority when you leave a role.
For many women, the logical starting point seems to be an NFP. However, it may be more prudent to consider a board or committee role on a government body if you are not conflicted via your day job or to look to gaining a position on your sector / industry body, particularly if it regulates or controls the accreditation for your profession (eg. Engineers Australia).
Experience gained on both government and industry bodies can often align more closely with your profession or career and give you a better suite of Non-Executive Director skills than an NFP, which can be hard work if the governance needs attention and time consuming, particularly if you are on the audit and finance committee.
Family and other private companies are also a good place to start your board career.
Building your board portfolio
A board portfolio needs to be put together with a modicum of thought and strategic focus. An expectation that years of serving on a range of NFP boards in an unpaid capacity will stand you in good stead for a paid board, is not necessarily correct. The sector, size and scope of your NFP board will matter. For example, a guest speaker at a recent WOB event told us that serving on a high-profile NFP sports board in NSW was her entry to numerous paid boards.
Your capacity to make decisions, drive consensus and chair committees in the NFP sector will also come into play. If you only have NFP experience, then ensure recruiters know how much it turns over, staffing numbers and have an understanding of the complexity of the business. This will stand you in good stead for hard-nosed recruiters whose clients want ‘experienced’ directors – often code for a preference for someone who has a paid directorship – but are willing to look to newer directors with the right skill set.
More NFPs remunerating board members
While being paid is not usually the motivator for people to serve on NFP boards – with good reason, there is good news when it comes to NFPs starting to remunerate board members. In a nod to the professionalism now required for board members of NFPs and in recognition of the increasing workload, there is some movement in the number of NFPs paying their board members.
Surveys by the Australian Institute of Company Directors (AICD) over the years have found that between 18 and 20 percent of board members of NFP organisations are paid. These are usually board members of large or extra-large NFPs that run a business, often in the health and care sectors, or of peak industry bodies that maintain the accreditation for their sector, eg CPA Australia or the Chartered Accountants ANZ.
A recent McGuirk survey which included 177 unlisted public boards found that the median fee for directors was $23K and chairs $45K. It also found that boards in the charity and sports sectors pay the least, while boards in the healthcare sector reported the highest average rates. Further, the survey found that almost half of the NFPs paid additional fees to directors for committee work.
The 2023 McGuirk survey is being run in conjunction with The Governance Institute. If you complete the survey, you receive a free copy of the report.
In its 2022 review of vacancies, WOB noted that 69% of the NFP positions posted were remunerated in one of the following ways:
- 25% of those posted paid directors fees in 2022
- 25% offered contract payments, other payment types or committee fees.
- 25% paid expenses. In some cases, this covers professional development.
Why pay board members of NFPs?
The Australian Charities and Not for Profit Commission (ACNC) reports that charities that decide to pay board members may do so for a variety of reasons:
- Charities can be large complex organisations that need board members with particular skills and experience to be effective. Offering remuneration may help a charity attract the right people for its board.
- Remunerating board members may enhance the sense of accountability and responsibility from the board.
- Offering a payment can increase the pool of potential board members and lead to greater diversity on boards. There are many people who cannot afford the time to serve properly as a board member but would otherwise be great additions to a charity board.
- When board members are paid for their service, charities may expect greater engagement in attendance, communication, and decision-making.
Director remuneration guide
Exploring opportunities to solve the gender pay gap in director remuneration