My Line of Thought…Paying Board Members

Some universities in Australia are compensating members of their university councils/boards, per an article in The Australian[1]. Councils are charged to exercise all powers, authorities, duties, and functions other than powers specifically excluded under legislation in governance and oversight of the university. The Chancellor and the council are the boss of the University’s Vice Chancellor. These councils are like an ASX’s listed company board albeit there are differences, for example, in compensation rates and in how a member secures a place on the board and/or removed. For Australian universities there are no annual shareholder meetings and voting by shareholders.

Paying a “volunteer” to serve on a university board is different by country. In the United State members are typically not paid. In fact, it is the opposite, especially at private universities, where to be considered for a position on the board an individual, in addition to having influence and the appropriate level of expertise/experience, is likely to have significant philanthropic capacity. In the United Kingdom there is the Higher Education Code of Governance that addresses the issue in Element 7.7:

“Current normal practice is not to remunerate external members and to pay only travelling and other incidental expenses. However, if the governing board decides it is appropriate to remunerate, it will need to consider the:

·      provisions of charity and employment law;

·      implications for the division of the responsibilities between the governing board and the executive;

·      public service ethos which applies generally among HE governors;

·      need to be explicit about the time commitments;

·      need to apply a formal process of appraisal to the remunerated governor.

Where it is decided to remunerate, payments would need to be both commensurate with the duties carried out and reported in the audited financial statements.” [2]

A review of Oxford University’s Financial Statements 2015/2016:

“No trustee has received any remuneration…The total expenses paid to or on behalf of a trustee were £1,140 (2015: £1,700). This represents travel and other expenses incurred in attending Council and related meetings.”[3]

McGill University, located in Canada, makes no reference to a member of the board receiving compensation in the Board of Governors Handbook 2017 – 2018 or in the university’s financial statements[4] [5]

All the boards and their members have very important responsibilities regarding governance, legal, senior management oversight (the hiring and firing of the vice chancellor/president), etc. and are protected from personal liability through a comprehensive directors’ and officers’ liability university paid insurance policy. There is, however, a difference in the culture of philanthropy among boards.

There is a saying, “give, get or get off.” Universities ask alumni to contribute to make a difference in the lives of today’s students by supporting scholarships, therefore, it behooves the university to be able to communicate that at the highest level of the university individuals too are making a philanthropic difference. It can be rather disingenuous to be stating the case for gifts, but leadership (board/council) themselves do not philanthropically support the university and, in some cases, are getting paid by the university.

Universities can attract the right talent to serve on a board even if they are not compensated. In reviewing the Board of Overseers or President and Fellows (the Corporation) of Harvard University (Harvard has two governing boards) or Oxford University’s Council an impressive talent pool has been amassed. [6] [7] [8]

Why do these highly influential, wealthy, and experienced leaders volunteer to serve on university boards? They believe in advancing the mission of the university because it is a good thing to do and universities are a cornerstone of a civilized society. There are other reasons:

Connections. The opportunity to serve on a powerhouse board provides an opportunity to build a network otherwise not available to the individual. If Harvard asked if you would serve on their board would your reply be yes only if you were paid? (Yale alumni, no need to comment.)

Information. Boards have access to information that can prove useful. For example, board members receive endowment financial investment reports and updates from money managers.

Repay. For some board members it is a way of giving back to their alma mater. They are grateful for the education and experience they received that framed their successful career.

It’s good business. Universities are economic drivers and for many communities are an employer anchor—“A University Town.” Serving on the board is a way to connect the university to the community and stay abreast, and influence, the developments of the university. Further, industry leaders are keen to understand curriculums as their success is dependent on the university graduating students with the correct skill set.

Tradition. Some members have a long tradition of the family involvement with the university and there are legacies that go back generations. The desire to serve on the board stems from deep seated long-standing family commitments.

Academics. Although a member has amassed his/her fortune in business, he/she serve as protector of the classics and liberal arts education. They want to ensure universities don’t lose sight of their history in the wake of new trends.

Faith. Accept the invitation to serve on a board, for example at a faith-based university, because it is God’s will and a way for them to serve their faith.

Philanthropic oversight. As aforementioned in the U.S. many board members are significant donors to the university and, for some, such an investment comes after being involved at the highest level. There is comfort sitting at the table of the organisation where one has philanthropically invested millions.

Social. Giving time as a board member offers up a plethora of special invitations to functions. Serving on a board affords the opportunity for social interaction.

Ego. I would be remiss if I left out ego. Individuals volunteer to serve his/her ego. The ability to share they are on the board/council of XYZ University plays well at social functions and lends creditability to the individual’s professional endeavors.

Locally, opinions have been expressed that Australian university alumni are just not philanthropic and there just isn’t a culture of philanthropy. I disagree with the former and agree with the latter. Alumni are generous and do give when properly engaged, a gift proposal aligns with their passion and interest, and the university is making a difference/has a good reputation. Although there is a culture of philanthropy in Australia, it is not universally entrenched across the higher education sector.

To secure philanthropic investment and create a cultural of philanthropy requires investment in advancement professionals, programming, and instilling philanthropic teamwork across the university—at all levels. Just because someone is rich and you have a need for money doesn’t mean they will gift it to you. Further, the thinking if 10,000 alumni of XYZ University were asked once to give $500 each to secure $5,000,000 is not reality. If it were that easy it would be happening and the higher education professional advancement landscape would look different.

Further, Australian universities are playing catch up in creating a culture of philanthropy among their alumni. Creating this culture starts when alumni are students, instead of 20 years after they have graduated. See Penn State University’s student philanthropy.[9] More investment is needed today in Australian higher education advancement operations to raise more monies, even when it means a future professional or leader will reap the benefit and the praise for a realized gift of the future for the work that was done today.

There are the pros and cons to compensating board members, but attention should be given to how donors or potential donors will receive the news. It is important alumni feel they are valued and are treated accordingly with value add programming and benefits. With today’s rising tuition and government funding cuts increased philanthropic dollars can make a difference. University boards can take an active leadership role by engaging in advancement work of their respective universities and contribute to enhancing that much needed culture of philanthropy.