Updated: Sep 30, 2020
In my work as a nonprofit consultant, I often see new nonprofit leaders make one very interesting decision: Placing family members on their board of directors. The belief is that it provides them with a level of security and loyalty, and alleviate any issues of being voted out or fired from the organization. However, one should consider the issues that could arise from having families on the board.
Imagine, you’re the Executive Director of a nonprofit and your spouse is on your board and you all have unresolved conflict at home, chances are, those issues will transfer over into board meetings and impact the decisions made in about the organization.
Be mindful that the IRS considers this to be a conflict of interest that impacts charity.
The IRS defines blood relation as family members who are your mother, father, brother, sister, son, daughter, and grandmother or grandfather. The IRS also requires that public charities (those with a 501(c)3 designation) have at least 51% of the voting members of the board of directors be unrelated
KEEP THIS IN MIND “Beyond a simple majority, it is also important that the organization is able to form a quorum of majority-unrelated directors in order to conduct an official board meeting. To put that in perspective, if a nonprofit has 7 board members, two of whom are married, the overall balance is OK. But, if only 4 directors can attend a board meeting, and 2 of the 4 are the related directors, a quorum hasn’t been reached.”
Please note that rules are quite different for foundations, though no less restrictive
Source: Foundation Group
I hope you found this to be extremely helpful! If so, let me know.