Can Family Members Serve on the Board of Directors for a Nonprofit?

The most important aspect of compiling and running a nonprofit board is establishing its independence. A board of directors should be balanced so as to best consider an organization's needs from as many points of view as possible. Considering board construction from this perspective, whether and under what circumstances members of the same family can serve on a board depends on a variety of factors.

No laws explicitly ban members of the same family from serving together on a board of directors. Depending on the kind of board and its sources of funding -- publicly held and privately held boards have entirely different rules -- some state rules might prohibit the presence of a majority of board members who are related. Even when it's not specifically prohibited, best practices suggest that no one family should dominate the board of directors of a nonprofit that accepts outside funding. Where family trusts, for instance, often have relations dominate a board of directors, a church or other community-based nonprofit is advised to avoid appointing voting blocks of family members.

In the bylaws of many nonprofit organizations, a conflict-of-interest section addresses policy regarding family members serving together. If there is no clause, one should be added that takes the boards likely makeup and coals into account. If a nonprofit is established in such a way as to accept family members serving together but not comprising a majority, that should be explicit in the bylaws. A clause might be added, for instance, prohibiting a quorum consisting primarily of family members.

Concern that family-led boards could diminish funding opportunities is legitimate. Although it is not illegal, depending upon the sources of funding, family members may be banned from serving together on a board of directors. In Maryland, for instance, state mental health services funding may not be given to nonprofits whose boards are dominated by family members. This can be especially inhibiting for nonprofits with only three board members, if two of them are related. Consider rules beyond conflict of interest when crafting or changing the conflict-of-interest clause in a set of bylaws. It is difficult to ask a volunteer to step down, especially when volunteers can be so hard to come by. Best practices suggest dodging that bullet altogether.

Effective nonprofits have strong boards that lead well and fairly. Each nonprofit must determine if having related members on a board strengthens its board's abilities -- or weakens them. If effective members happen to be related, and their presence and expertise improves the board's makeup, steps can be taken to accommodate the relationship. If, however, the candidates lack impartiality or don't make an adequate contribution, selecting a more varied board might be helpful.