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Hiring a board member's company vs hiring the board member.

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  • Hiring a board member's company vs hiring the board member.

    I know that it is not illegal for a nonprofit to hire a board memeber or a board memeber's company, and that it'a viewed as an occasional conflict of interest. What I'm unlear on are what the differences are legally.

    For instance, I understand that if a board member is directly contracted to do work that exceeds $500 in an entire year that individual's liability changes. A totally unpaid board memeber is viewed as a public servant, but a board member that's paid might be liable for various things.

    Additionally, I want to know whether there is a legal difference between hiring a board member as a contractor or hiring that board member's company.
    Example: Dave is a boardmember for the The Imaginary Non-profit (501c3). Dave's paid day job is as the Owner of Graphic Designs R Us Inc. If The Imaginary Non-profit hires Graphic Designs R Us for $5000 to do a brand revamp (logos, web, brochures, etc) is that any different than hiring Dave as a contractor? Is there a difference between his staff at his company doing the job or him doing the job via his company?

    Also, is there a difference between contracting a board member directly and a company that individual works for as a regular employees, non owner?
    Example: Tom is a boardmember for The Imginary Non-profit (501c3). Tom the board member's paid day job is as a plumber for Chicago Plumbing Inc. If The Imaginary Non-profit hires Chicago Plumbing Inc for services that cost $5000 does Tom have to worry about additional liability as a board member just because he's an employee? Does that change if he's the one who fulfilled the plumbing job?

    Thanks everyone. I appreciate your time and help with understanding the nuances of these laws.

  • #2
    Re: Hiring a board member's company vs hiring the board member.

    This sounds a bit like a school or academic assignment and such assignments normally cannot be answered here per forum rules.



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