Among the 550 or so nonprofit organizations that employ more than 46,000 people with disabilities under the national AbilityOne Program, El Paso’s ReadyOne Industries stands out.
Because the eight members of its board of directors are paid.
According to ReadyOne’s 990 tax return for 2018, compensation ranged from a high of $49,400 for board Chairman Robert Rockey to $19,250 for outgoing chair Gary Hedrick.
In the nonprofit world, the practice of paying board members is rare and frowned upon, according to the National Council of Nonprofits, which says this in an online statement about the issue:
“Board members provide policy oversight and often visionary leadership for entire communities, while cheerleading for the nonprofit’s mission with donors, potential donors, other volunteers, policymakers and clients/consumers of the nonprofit’s services.
“And the expectation is that that they do all this as volunteers.”
The U.S. Internal Revenue Code also addresses the subject, saying, “Charities should generally not compensate persons for service on the board of directors except to reimburse direct expenses of such service.”
The biggest nonprofit in the AbilityOne network, Peckham Vocational Industries in Lansing, Michigan, had more than 4,000 employees and $192 million in revenues in 2006, according to the latest 990 on file.
The company issued a statement in response to El Paso Inc.’s questions saying, “Peckham has and has always had a voluntary, unpaid, board of directors in our 42 years of service.
“Over the years, our board of directors has been a very engaged team of community individuals who take board governance and the management of that process to heart.”
ReadyOne’s workforce of 1,400 people produces military clothing, uniforms and other various goods under no-bid contracts aimed at employing people who are severely disabled.
It is a large nonprofit, with total revenue in the last fiscal year of $114 million, and ranks in the top 10 of the 550 nonprofits in the federal AbilityOne program.
Rockey said he has “absolute comfort with our compensation program and the differences between us and some of the other nonprofits.”
He was traveling when reached by El Paso Inc. but replied by text message to questions about compensating the ReadyOne board, which also oversees a smaller for-profit division called Roicom, short for Ready One Industries- Commercial.
About 250 of ReadyOne’s 1,400 employees work in the for-profit division.
“This board requires a very significant amount of time and effort,” Rockey said. “Eleven meetings a year for all members, 11 additional for those also serving on for-profit board committee assignments, which require 11 additional meetings a year, plus preparation and other project commitments during the year.
“We also have professional outside compensation studies of best practices for both for-profit and nonprofit boards every other year. We use this guidance and are very conservative in determining compensation positioning.”
He went on to say there have been discussions about the issue and that board members “are very comfortable that we are properly positioned to attract the talent and experience necessary to guide this wonderful organization.”
“We are a unique organization in that we have no foundation support, grants etc. to provide financial support,” Rockey continued. “Every dollar spent is a dollar which the company has earned. Not the case with many nonprofits.”
Board member Adolpho Telles said he has served on for-profit corporation boards that offer substantial compensation and didn’t know about the nonprofit issue or ReadyOne’s compensation when he took the appointment.
“I can only answer for myself; I can’t answer for the board,” Telles said. “When I was asked to be on the board, I didn’t know it was a paying board.
“I went on because I like what the organization does for the city of El Paso and for the county of El Paso. It provides opportunities for the people that would not have opportunities otherwise. To me, that was important.”
Despite the success of ReadyOne today, he said, “it continues to struggle. So it needs good board members.”
Email El Paso Inc. reporter David Crowder at firstname.lastname@example.org or call (915) 534-4422, ext. 122 and (915) 630-6622.